Goal setting is very difficult for many people, in part because they try to swallow the whole elephant all at one time. Sometimes goals are very easy to understand but for whatever reason, they’re very difficult, confusing, and sometimes seemingly impossible to achieve.

In the 1991 movie “What About Bob,” Dr. Leo Marvin wrote a book called “Baby Steps” and that pretty much summarizes the way that goals need to be achieved.

I travel frequently. Let’s say that I’m going to Florida. I don’t focus on going to Florida; I focus on the many steps that it takes to get to Florida. For example, first, I have to get in my car and make sure that the car has gas. Second, I have to get myself to the parking area at the airport. Then once at the parking area at the airport, I have to get myself onto the shuttle bus to the terminal. And once I’m at the terminal I have to get through security. And once I’m through security I get to the gate, board the plane, take my seat, change planes, whatever the next series of steps are. There might be 15 different steps, but when I travel I focus on doing one step at a time until I’ve arrived at my destination.

Business goals, educational goals, personal goals, and social goals all work the same way. Break them down into little pieces.

Sometimes it’s easier to understand sports than it is to understand real life, because sports are so definable. The rules are so clear and well understood. Any game or sporting event is easy to follow if you understand the rules. Everyone on the field understands the rules, and everyone in the stadium understands them too, and for those reasons, everyone knows when a player is making the right move, the wrong move, or if he is completely off course. But somehow in our life, setting goals just doesn’t work the same way.

We have to get in the habit of breaking big and seemingly impossible goals into bite size pieces. For example, writing a book is not a book, it’s a series of chapters. Or maybe the focus shouldn’t be on the whole chapter but rather on a number of pages or a series of paragraphs. And maybe those paragraphs follow a series of outlines that require some research.

One way or the other, you have to ask yourself, “What are the pieces that will eventually get me to the place I want to go?” By asking that critical question, you will eventually get yourself to the goal line. It’s very tough to get through the Red Zone to the goal line. The first 80 yards are pretty easy, but once you get into the Red Zone, those last 20 yards, the field is short, players are on their guard and there just isn’t a lot of margin for error. The Red Zone is where most of the fumbles take place but it’s also where the points are made.

Taking the ball 90% of the way down the field isn’t good enough because you don’t get any points for 90%. You have to cross the goal line. You have to identify your goals, you have to understand the objectives, and you have to really be clear about what it is you want to do and why you want to do it. When you understand what the outcome is going to be and what the reward is to you when the job is done, it gets a lot easier to plan the work and break the job into lots of little pieces.

We’re all doing more with less these days. As the organization changes, how can credit professionals create meaningful goals despite internal and external changes that are beyond their control? How can credit professionals proactively bring change to their organizations by changing process and policies to increase cash flow? How do you create a credit culture where people think about doing business differently and are purposeful about making and accepting change that they believe will make a positive difference? Attending CreditScape will help arm you with tools to do your job better. Visit CreditScapeConference.com for more information. I hope to meet you there.

Joel Block is a business advisor and long-time venture capitalist and hedge fund manager (gobbledygook for “professional investor”) who is based in the San Fernando Valley area of Los Angeles. He will speak on Managing Change in Your Credit Department at CMA’s Spring CreditScape Summit on April 4-5, 2018. For more information about the event, visit www.CreditScapeConference.com.

Did you ever notice how some people always know when the light is going to turn green while sitting at a red stoplight? Do you think maybe that they are looking side-to-side for the predictor about when the green light is going to turn red going in a cross direction? The same in business, there are some people who just are more in touch with signals and signs that point to trends and activities that are about to take place.

Driving is a great example of being predictive and looking for signs that indicate trouble or that help to change your strategy. There are clear rules in driving. One should stay a certain distance from another car in driving. However, sometimes cars do not apply their brakes evenly and they will jerk on their brakes a lot like in business sometimes people do not do things in the smartest way. When you are behind that kind of driver, maybe the best strategy is to look at brake lights of a car ahead of him so you can get a sense of when the slowdowns are coming. Business people need to develop signs of their own that are similar to the kinds of signs that drivers work toward or use. Similarly, traffic signals and the way that you can predict when a light is going to turn red based on the yellow or when a light is going to turn green based on the crossing red. What are the signs you are looking for?

When you come to CreditScape, I’ll be talking about some of these predictors in helping you navigate a changing business environment. With more metrics than ever before available, and the adage of “doing more with less in credit” becoming a reality for most businesses, attending an event like CreditScape will help arm you with tools to do your job better. Visit www.CreditScapeConference.com for more information. I hope to meet you there.

Joel Block is a consultant and long-time venture capitalist and hedge fund manager (gobbledygook for “professional investor”) who is based in the San Fernando Valley area of Los Angeles. He will speak on Managing Change in Your Credit Deparment at CMA’s Spring CreditScape Summit on April 4-5, 2018. For more information about the event, visit www.CreditScapeConference.com.

Unfortunately, we can’t accomplish everything by telephone, email, webinar, TeleSeminar, text or Skype. There was a great United Airlines TV commercial in the 1990’s with a CEO passing out airline tickets to his team telling them to get “face to face” with the customers once in a while.

Some years ago, I found myself in a similar situation, up against such a frustrating problem, that I finally got on an airplane to go and solve the problem in person. The result was shocking, and fast.

I started my career in the CPA business in the mid 1980s, when I worked for PriceWaterhouse (now called PwC). The last account I worked on at PwC was a giant syndicator. My job, with an army of other guys, was to convert the books and records of over 500 partnerships into tax returns. The accounting was horrible and the tax work was tedious but I loved reading the partnership agreements. So I left the firm and went straight into real estate syndication but along the way, I became a CPA in Colorado but I gave up my license after 10 years because I didn’t practice accounting anymore.

At one point in time, it became advantageous for me to reactivate my CPA license. As an Expert Witness, having a CPA license adds to my credibility.

Even though I worked for PwC 25 years ago, the HR department sent a letter to the California State Board of Accountancy indicating that I did work for the firm, but the CPAs at the firm who I worked for have all either left or by now, retired. Therefore, no one could vouch for the work I did. Unfortunately, the State Board of Accountancy wanted a CPA to sign off on my hours worked at the firm.

I was unable to get a CPA at PwC vouch for me and the State Board of Accountancy wouldn’t budge. This went on for over two years and I couldn’t bring it to resolution although there was one woman at the State Board that been overseeing my case and the back and forth of our discussions.

One day I had enough and I decided the only way to break the log jam was to get on an airplane, go to Sacramento and physically show up at the offices of the State Board of Accountancy. I didn’t have an appointment but I knew they were open.

When I arrived in Sacramento, I called the State Board of Accountancy. As expected, the person that I had been dealing with was in the office. Not having an appointment would normally be a terrible idea but showing up unannounced seemed like a better tactic in this situation. So I showed up.

I explained the problem to her in person one last time – that no CPA at PwC would sign off on my hours, but their HR Department had done so, and it just didn’t seem reasonable that I should be penalized because I wasn’t able to find a CPA willing to sign off on my hours.

When I explained the situation in person, it seemed to make more sense to the woman who was working with me. Maybe she was more focused on the problem because I was standing in front of her. She went and got her manager who ran the initial licensing unit, and after I explained my story to her, it wasn’t five minutes before she signed her name on an approval slip and attached it to my file. A problem that I had been working on for over two years was resolved in less than 15 minutes.

There’s a big lesson here. Sometimes you have to just get on an airplane and deal with the problem head-on and face-to-face. If you don’t do that, sometimes you’ll drown in your problems for years on end. If you deal with people that are far away or if you sometimes get in the habit of talking to people only by telephone or other electronic media, you’re missing the boat. Sometimes you just have to change things up, get on an airplane, and go make it happen. It worked for me. Maybe this advice will help you.

When you come to CreditScape, I’ll be talking about change, including changing your mindset about how you do your job and approach credit. As the credit profession (and the whole world, for that matter) has changed with technology, attending an event like CreditScape will help arm you with tools to do your job better. Visit www.CreditScapeConference.com for more information. I hope to meet you there.

Joel Block is a business advisor and long-time venture capitalist and hedge fund manager (gobbledygook for “professional investor”) who is based in the San Fernando Valley area of Los Angeles. He will speak on Managing Change in Your Credit Department at CMA’s Spring CreditScape Summit on April 4-5, 2018. For more information about the event, visit www.CreditScapeConference.com.

The only thing constant in business these days is change. As the organization changes, how can credit professionals respond effectively to internal and external changes beyond their control? How can credit professionals proactively bring change to their organizations by changing process and policies to increase cash flow? How do you create a credit culture where people think about doing business differently and are purposeful about making and accepting change that they believe will make a positive difference?

Stop us if you’ve heard any of these scenarios before. Your boss comes to you and tells you that you need to start accepting credit cards (when your company hasn’t done that before). How about this: your company is repurposing someone in your already short-staffed credit department. Or, maybe your previously great-paying customer of many years tells you, “We’re changing your terms. You must accept in order to continue to do business with us.” Or, have you wished that you could have that proverbial “seat at the table” with upper management?

At CMA’s Industry Credit Group meetings, the majority of the best-practice conversations that were had in 2017 had something to do with managing changes like the ones mentioned above. As a response to these conversations, CMA has put together a program centered around managing changes like these, to help you do your jobs better. The program is geared towards practitioners with all levels of experience and expertise to leverage the knowledge and experiences of practitioners who can help you be ahead of the curve and effectively manage change.

The 2018 CreditScape Spring Summit, powered by United TranzActions, will feature a two-day workshop that includes a keynote address on change management, training sessions, expert practical and legal advice, and networking with other credit professionals. The goal of CreditScape is to provide an opportunity for credit practitioners at all levels of experience and expertise to come together to solve problems and provide solutions for their real-world issues they face at work.

Over the next few days, our keynote speaker Joel Block will be guest blogging about dealing with change in your credit operations, a topic he will explore at CreditScape.

We invite you to join us at the Spring CreditScape Summit, powered by UTA, April 4-5, 2018 at the Hyatt Regency Orange County (or view the website at www.creditscapeconference.com), and to read the blogs, as the information you’ll receive can help you do your job better in the long run.

What changes in your credit department do you think are the most difficult to deal with? We welcome your feedback.

Like it or not, handling complaints is part of the work that goes on in a credit department. And it’s a task that’s vital to your company’s success. How well you handle gripes from disgruntled customers can make the difference between getting paid and keeping the customers–or losing their business altogether.

You answer the phone, hear the voice on the other end of the line, and feel your blood pressure begin to rise. It’s one of your chronic complainers, credit customers that always have a problem. Much as you’d like to turn the call over to someone else, you’re the one of the firing line. How are you going to keep from losing your cool–and losing the customer? Here’s help.

Listen actively. It’s important not to turn a deaf ear to the chronic complainer. To begin with, there is often a legitimate grievance of some kind. If you don’t take corrective steps, the problem could come back to haunt you.
Key Point: Paraphrase the complainer’s main points. Say something like “Excuse me, but do I understand you to say that the package didn’t arrive, you’ve written twice and received no response, and that’s why you didn’t pay your bill?”

Added point: Be sure to acknowledge the caller’s feelings. A big part of the chronic complainer’s problem is the sense of powerlessness that comes from feeling that nobody knows, cares, or even understands how he or she is suffering. Verbalizing what you take to be the customer’s emotional reaction to the situation helps to break the cycle of blame, ignore, blame-for-ignoring, etc.

Establish the facts. A key feature of chronic complainers is their tendency to exaggerate facts and then to overgeneralize them. Thus, if a chronic complainer tried to call you three times during lunch hour, it becomes: “I tried calling you all day, but, as usual, you were trying to avoid me.”

Key Point: Limit the scope of the complaint by asking questions that isolate the facts. Ask when, exactly, the customer’s unanswered calls were made, unanswered letters were written, or the problem was first noticed. Check your files or phone logs to verify these statements, and state your findings. Remember to keep the discussion on a factual level. Don’t comment on the implications of the facts because this will lead very naturally to responses like: “You see, I told you your department fouled up.”

Resist the temptation to apologize. Although apologizing for some glitch may seem like the most natural thing in the world, it’s the wrong thing to do when you’re faced with an unhappy credit customer.Reason: Since the main thing the person is trying to do is fix blame–not solve problems–your apology will be seen as an open invitation for further blaming.

Force the complainer to pose solutions. If the chronic complainer ignores your suggested solutions, evades the opportunity to help, and persists in trying to get you to admit what a poor company you work for, throw the ball back into the complainer’s court with this gambit:

“I have to speak with someone else in 10 minutes. What sort of action plan can we work out in that time?”

If the customer can’t come up with anything, he or she should at least recognize by this point that you alone can’t take all the blame for the impasse. And if the person does come up with a suggestion–no matter how impractical–you will have at least succeeded in getting him or her to stop complaining. Now your customer should be much more receptive to whatever reasonable compromises you come up with.

When you work with multiple accounts, staying on top of each and every one can seem impossible. When risky accounts slip through the cracks, your business could be affected. But by closely monitoring your accounts and being alerted to changes, you can make faster credit decisions and protect your business.

D&B Credit can help you manage and monitor your account risk with ease. User-friendly, smart and simplified, D&B Credit makes accessing the industry-leading relationship data and financial scoring models from Dun & Bradstreet easier and more effective than ever. Now you can keep a close eye on your key accounts and better monitor your entire portfolio.

As a seasoned credit professional of more than 30 years, I have never seen so many changes in my career as I have in the past few years. From electronic payments and credit cards, to fairly consistent paying customers changing their own terms, to expanding markets and doing more with less, change is something that’s been happening at a much more frequent rate. How you deal with these changes can really make or break your company’s credit department, its cash flow, and ultimately your career.

Now that we have all made our “New Year’s resolutions,” and a month has come and gone since we made them, I urge you to make sure you don’t drop the ball on your personal and professional goals.

Maybe you would like to improve your own personal skill set and the overall skillsets within your organization. Or perhaps you want your team to get up-to-date with the latest credit training / information in the marketplace. For me, as I plan for 2018, I look at ways to improve our credit department and include them in my budgeting process. I urge you to please take some time to review the latest CMA CreditScape Spring Summit information. By attending the two days of workshop training, I believe that it will propel you and your department to the next level.

What will be covered this spring…“Dealing with Change Management.”

Here are a few of the items that stood out to me:

All Levels of Expertise Welcome – Good for beginners to experts in your departments. With 14 sessions, there is something in there for everyone, including customer service skills, stress management, and financial statement analysis.

Skills for the credit manager of 2022 – What should credit professionals be doing now to make sure they’re ahead of the curve in 5 years, and what skills should they already have.

Customers who change their own terms – With an increasing number of companies trying to dictate their own terms, what can, and should, credit professionals do?

Changing existing processes through automation.

Managing change within and outside of your company.

Getting a “seat at the table” with upper management.

…and a lot more.

Plus, the discussions are led by practitioners, not marketing people, to provide you with tangible results to bring back to the office.

In an environment where a credit professional’s time is at a premium, we hope to have your support and attendance to help “prove” that CMA is doing what’s best to help your company’s credit department.

I hope you have a great year and are able to reach your personal and professional credit goals. Please remember that CMA is here to help.

“We just heard you’re going to be selling off inventory from Claire’s Concrete, Inc.,” said Florence Sherman of FirstRate Concrete.

“That’s right,” replied Joe Kaplan of WestEnd Bank. “We had a security interest in all of Claire’s inventory.”

“Well, a lot of the raw materials Claire’s had belonged to us,” Sherman said. “We sent them materials on consignment. If they didn’t sell, we could take them back. Or, if we needed material manufactured into specific forms, we had Claire’s do the work, and we paid for it. So, we’ll be taking those materials back.”

“I see no indication that those materials belonged to you,” Kaplan replied.

“Look on the inventory sheets. Some of the materials have ‘FR’ in front of them. That means they belong to us.”

“But I can’t tell by looking in the warehouse which material is which,” Kaplan complained. “You didn’t post a sign. I didn’t find any UCC filing that identified your interest in any of these materials.”

“We didn’t have to file under the UCC,” Sherman snapped. “Claire’s knew which goods were which, and we had a firm understanding that our goods were to be kept separate from theirs.”

“Do you have this agreement in writing?” Kaplan inquired.

“No, it was an understanding,” Sherman stressed.

“Well, if you wanted to protect your interest in your raw materials, you should have identified them,” Kaplan repeated. “As a secured creditor, I must be able to come in and decide what goods belong to whom. The way things look, it appears everything belongs in Claire’s inventory. We’re going on with the sale.”

Can WestEnd Bank sell all the raw materials?

Yes they can.

Under the UCC, if goods are “delivered to a person for sale and such person maintains a place of business at which he deals in goods of the kind involved, under a name other than the name of the person making the delivery, then with respect to claims of creditors of the person conducting the business the goods are deemed to be on sale or return.”

Therefore, when Sherman shipped raw materials to Claire’s, they became part of Claire’s inventory since Claire’s dealt in the same goods as the type Sherman shipped.

Had Sherman wanted to protect her company’s interest, she should have either posted a sign near those specific raw materials to evidence her company’s interest in the goods or she should have filed a security interest. Because she did not take either step, the court found the bank had priority, and ruled that all of the raw materials belonged to the bank.

Joel Block has been added as the keynote speaker at the upcoming CreditScape Spring Summit, powered by United TranzActions on April 4-5.

Block, who will talk about change as a constant practice in your company’s credit department, is a long-time venture capitalist and hedge fund manager (gobbledygook for “professional investor”) who lives in a Shark Tank world like what you see on TV. Companies regularly pitch ideas to Joel’s company, looking for business capital so he has learned to spot likely winners – frequently in 3 minutes or less and sometimes in under 30 seconds.

Speaking on business and money for over 15+ years, Joel has put together more than 40 companies; he has advised hundreds more and he has taught thousands of people innovative ways to think about leadership, strategy, sales, and money.

Unlike most business speakers, Joel explains sophisticated concepts around personal effectiveness, money, and business leadership in plain English – no jargon, no hype, and no fluff. Nobody breaks down complex issues like Joel Block with hard-won lessons and practical principles from the real world to help your attendees gain traction personally, professionally, and financially.

Nicknamed The Money-Making Guy™, Joel’s massively unique and immensely powerful leadership, sales, and disruptive innovation message is perfect for senior management, middle managers, and sales teams. His programs are refreshingly memorable, quotable, and actionable so your people leave your event ready to think, act, and work differently – impacted by big ideas and actionable insights at the convergence of money, success, and significance.

The 2018 CreditScape Spring Summit will feature two days of workshop training, expert practical and legal advice, and networking with other credit professionals, designed to give you insight on areas where you can make improvements in your company’s credit operations.

The goal of CreditScape is to provide an opportunity for credit practitioners at all levels of experience and expertise to come together to solve problems and provide solutions for the real-world issues they face at work.

While the Summit features subject-matter experts sharing their experiences with credit practitioners, much of the learning at CreditScape will come from practitioners sharing real-world experiences with each other in workshop-style settings. This is a perfect opportunity for credit and collections teams to get away from the office to pursue a journey towards process improvement.

At the end of each year, when you evaluate your collection agency performance, what method do you use to calculate their recovery rate and over what period of time do you analyze? We discuss this topic very frequently with our clients. Contingency based collection agencies only earn revenue if they collect the debt that is placed with them, therefore, the recovery rate is usually the critical factor for allowing both the client and the agency to properly evaluate their relationship.

If a collection agency has a 50% recovery rate for your company, an excellent result, it still means that 50% of the time they are working for free as they still must work the files they are not able to collect on. Fixed expenses such as rent, payroll, insurance, electric, phones all must still be met. Given this, and the fact that over the past 20 years the average fee charged by an agency has been dramatically reduced, collection agencies are laser focused on collecting as much money as they can, in-house, in the shortest period of time. This is how they make the most money for both their clients and themselves.

As many companies use more than one collection partner, most measure head to head performance by how much money an agency brings back to the bottom line. Ultimately, the agency that nets you the most cash will probably get the most placement volume. However, is the method of evaluation you are using really showing you who is doing the best job for your company in the long run and collecting on the most files? You should realize that how collection agencies judge themselves is often very different from how they are judged by their clients.

To compare the various performance measures, let’s assume that you are turning over, to your collection agency, 30 past due accounts per month with an average accounts receivable balance of $5,000 per file. The accounts are from 120 days to 240 days past due, and two accounts per month or $10,000 are defunct corporations or uncollectible at placement that cannot be recovered. Now let’s look at three different ways that collection agency recovery performance can be evaluated on the last day of the year, six month later, twelve months later and twenty-four months later.

In Year 1, the total dollars placed was $1,800,000 and the amount collected on Year 1 placements at the end of Year 1 was $700,000. Therefore, at the end of Year 1, the GCM for Year 1 placements was 700,000/1,800,000 or 38.9%.

Six months after the end of Year 1 an additional $250,000 has been collected on Year 1 placements so at that time the GCM for Year 1 placements is 950,000/1,800,000 or 52.8%

Twelve months after the end of Year 1 an additional $50,000 has been collected on Year 1 placements so at that time the GCM for Year 1 placements is 1,000,000/1,800,000 or 55.6%

Twenty-four months after the end of Year 1 an additional $25,000 has been collected on Year 1 placements so at that time the GCM for Year 1 placements is 1,025,000/1,800,000 or 56.9%

In Year 1, the total dollars placed was $1,800,000 and the amount uncollectible at placement was $120,000. Therefore, the net amount available for collection was $1,680,000. The amount collected on net Year 1 placements at the end of Year 1 was $700,000. Therefore, at the end of Year 1, the NCM for Year 1 placements is 700,000/(1,800,000-120,000) or 41.7%.

Six months after the end of Year 1 an additional $250,000 has been collected on net Year 1 placements so at that time the NCM for Year 1 placements is 950,000/1,680,000 or 56.5%

Twelve months after the end of Year 1 an additional $50,000 has been collected on net Year 1 placements so at that time the NCM for Year 1 placements is 1,000,000/1,680,000 or 59.5%

Twenty-four months after the end of Year 1 an additional $25,000 has been collected on net Year 1 placements so at that time the NCM for Year 1 placements is 1,025,000/1,680,000 or 61.0%

In Year 1, the total dollars placed was $1,800,000, the amount collected on Year 1 placements at the end of Year 1 was $700,000, and the commissions earned were $140,000. Therefore, at the end of Year 1, the NCCM for Year 1 placements is (700,000-140,000)/1,800,000 or 31.1%.

Six months after the end of Year 1 an additional $250,000 has been collected on Year 1 placements with additional commissions earned of $50,000. Therefore, at that time the NCCM for Year 1 placements is 760,000/1,800,000 or 42.2%

Twelve months after the end of Year 1 an additional $50,000 has been collected on Year 1 placements with additional commissions earned of $10,000. At that time, therefore, the NCCM for Year 1 placements is 800,000/1,800,000 or 44.4%

Twenty-four months after the end of Year 1 an additional $25,000 has been collected on Year 1 placements with additional commissions earned of $5,000. At that time, the NCCM for Year 1 placements is 820,000/1,800,000 or 45.6%

CONCLUSION

All of the methods described above provide a reasonable approach for evaluating collection agency performance as long as they are applied consistently. Consideration must also be given to open inventory at the time of evaluation. A percentage of the open accounts will still turn into dollars at some point. Given the historical 90-120-day lag on in-house collections as well as the overall backlog of the legal system that is often used in collection agency recovery efforts demonstrate that only evaluating collections in a single placement year at the end of that year, can produce a measure that does not truly represent agency performance. Our choice for the one which that most reflects true agency performance is the Net Collection Method, but no matter which method you choose, we feel recovery results for a specific period of time, such as annually, should be evaluated six, twelve, eighteen and 24 months after the end of that period. This will provide the best measure of agency performance short-term and over-all long-term. Given with most collection portfolios the majority of collections for placements made in the last quarter of a year will most likely occur in the first six months of the following year, if you only review results at the end of the year, this performance will be excluded from your analysis.

Additionally, evaluating an agency based on accounts that when placed are out of business or defunct corporations and are impossible to collect from is inherently unfair and will produce a biased comparative measure if different agencies are given placements with different percentages of uncollectible dollars.

Once again, you can look at this topic many ways and our goal in this blog post has been to shed some light on the difference approaches and how it may affect your agency review.

Sam Fensterstock is Vice President of AG Adjustments, CMA’s chosen collections partner. For over 40 years, AGA has been the most respected commercial collection agency in the nation. The company assists corporations with improving cash flow, while preserving a positive image with customers. It accomplishes this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

Happy New Year everyone! With the beginning of every new year, we like to think about the goals and objectives we set for ourselves in the coming year, to move forward both personally and professionally. A major goal of CMA’s this year is to expand the credit community, creating a better network for our members. Traditionally, we have looked at growing that community unilaterally within our own market (primarily California and Nevada). Now, we have the opportunity to expand the community by working with other credit associations to bring our respective communities together. By bringing credit professionals together through various networking activities, we can create a unique benefit through collaboration that our individual associations cannot achieve on our own. This is the true essence of what associations like CMA are designed to do – leverage the power of many individuals and organizations to create value that no one individual or company can create on its own, especially in the increasingly global nature of all of our businesses.

For the first time in its history, CMA is working with other credit associations to share educational and training resources, and to host customer account discussions among members of our common industry groups. CMA is collaborating with NACM Business Credit Services in Seattle and Southwest Business Credit Services in Phoenix to produce educational webinars and industry credit networks that our three associations can offer to our respective members – for FREE. Our goal is share our collective resources to add more value to our annual memberships. We all want our members to get more for their membership dues.

We are kicking off this collaboration with Bob Shultz’s Collections Negotiation Skills webinar on January 25 at Noon PST. Collectively, there are more than 150 credit professionals from all across the West registered to attend. In an environment where a credit professional’s time is at a premium, we are very encouraged to see members express interest in learning more skills and gaining more knowledge to improve performance. We hope that the members who participate in these new joint programs will see the untapped potential value that an expanded credit community has to offer. More information on this and other educational offerings is at www.creditmanagementassociation.org/events.

Along the lines with this is an expanded CreditScape program, which includes the hottest topics we’ve heard in nearly every conversation we’ve had with members: credit card chargebacks, companies changing their own terms, skills that credit professionals need to stay relevant, and overall dealing with change in your organization. I really hope to have your support and attendance to help “prove” that CMA is doing what’s best to help your company’s credit department.

We hope you have a great year and are able to reach your personal and professional credit goals, and we remind you that CMA is here to help.

Communicating With Sales Regularly – Formally or Informally – is Always Important

Do you speak to your sales reps about what you’re doing in credit?

If you don’t, you should.

One of the most important roles of a credit exec is to constantly communicate credit’s role in your organization and how it relates to sales.

In a recent Credit Today listserv discussion, a member asked for suggestions on what she might include in an upcoming presentation to her company’s sales team. A number of great responses were received.

Lisa Childress, Corporate Credit Manager at Bison Building Materials, recommended covering the following topics with sales:

How company profits are diminished the longer an invoice remains unpaid.

What the cost of money (borrowing) is for your company. Also, are bank covenants you must adhere to?

What their commission structures are. For example, are they on a “paid-when-paid” commission structure or do their commissions diminish as the account ages?

How they and credit can maintain customer relations.

Why you in credit absolutely recognize the importance of continued sales.

Cheryl, Fischer, CCP, credit manager at Barber Glass Industries, advised that the way you make your presentation with sales can make a big difference. “You have to communicate to them on their level, she wrote. “And that is definitely not a slight!” she clarified.

Visuals are Key

She’s learned over the years that sales reps in general are visual people and suggested very brief overhead computer visuals. “Graphs are always very helpful. Keep it short, sweet, and to the point with pictures and I don’t think you will find their eyes glazing over.”

And Jeff Borgens, CBA, Corporate Credit & QMS Manager at Aiphone Corporation, offered up some great suggestions as well.

First, he suggested, emphasize the principals of business partnership and mutual expectations. “It’s a partnership and we look for quality partners (customers) we can count on.”

Sales should also understand that credit will do what it says it will do and that “ongoing payments equal ongoing shipments.”

Second, make sure you “talk their language” when communicating with sales people. This means emphasizing customer needs and how you strive to meet those within the policies you’ve established. Talk to them about how you will help make the sale, rather than stop a sale if at all possible. And cover some of the tools you have to make that happen, such as guarantees, credit cards, letters of credit, or other security agreements. Make sure they know you’re not “sales prevention,” but are there to facilitate the sale, he wrote.

Finally, he suggested reminding sales that we need to be aware of the role our customers play with our product.

If you sell to someone else who is depending on delivery of “your” product, and that customer ends up on credit hold and hence can’t get the goods down thru the channel, it potentially puts your firm a bad light. “We need to be conscientious of those that buy thru the channel by making sure our business partners are reliable,” he wrote.This article originally appeared in Credit Today, the leading publication for the credit professional.

The CMA Nominating Committee is now accepting nominations and applications for service on the 2018-2019 Board of Directors. If you would like to nominate a candidate for service, or you are interested in applying for a Director position directly, please complete a Candidate Nomination or Application form and return it to CMA by February 1, 2018.

Do you have an automatic write-off threshold for small balances left outstanding on your A/R?

Some companies can research every short payment that comes their way, but for many, it’s simply not practical to do that. To keep up, you must set a minimum threshold, under which you automatically write off everything.

The two key variables to consider when setting this limit are:

The cost to you of researching a short payment, and

The likelihood of receiving payment.

As to number 1, the cost is simple. It’s the manpower required, per deduction, to research. You’ll want to take a couple of weeks and come up with an overall average amount per deduction. Let’s say you come up with 15 minutes per deduction. Then multiply this by the hourly cost of the staff involved.

But your cost is only one part of the analysis in this situation. If you find that traditionally your customers are right 85 percent of the time when taking a deduction (which is the typical average), then you will collect only 15 cents out of every dollar deducted.

At what level does your research become profitable? Do the math. You might find it’s higher than you realized. But two words of caution:

don’t let anyone in your customer base know that you do this, and

periodically research balances lower than your threshold so you can spot abuses.

With the turning of the calendar to the New Year, I always like to evaluate my relationships and reflect on the year that has just past. In doing that in 2018, I can’t help but think about the many ways that Credit Management Association (CMA) makes my job as a credit manager easier.

Here are some reasons that are important to me as a CMA member:

CMA continues to bring the credit community together via networking at Industry Credit Group meetings (my company and I are regular participants) and at educational events such as CreditScape and other webinars and programs.

CMA’s anscers.com website platform is unique in that it allows me to obtain past payment history of customers that also do business with other CMA member companies.

CMA also offers extremely competitive pricing on credit reporting contracts with the major credit bureaus. They also have a professional staff that can walk you through the best features of each report, enabling you to compare similar products so that you can choose the best ones for your company’s needs.

If your company supplies materials or labor for construction projects, CMA can make sure that your company’s lien rights are protected under the law through its construction lien filing department.

CMA is here to stay. It has been providing high-end credit services and education to companies like yours throughout California and Nevada for over a century and it plans on continuing this service for years to come. As CMA Chairman of the Board, I thank you for your continued support of CMA and its vision of a united credit community and I would also like to thank the staff of CMA for their dedication to the members of CMA.

Please also note that CMA’s offices will be open during regular business hours through the holidays except for December 22 (closing at 3pm), December 25 (closed all day), December 29 (closing at 3pm) and January 1 (closed all day). Normal business hours resume January 2.

In this global economy, one of the biggest challenges for many businesses is being able to detect financial duress by monitoring companies’ whose headquarters are outside of the United States.

Early identification of negative activity helps your company prevent lost revenue and service interruptions, it also helps minimize reputational damage caused by doing business with a company in violation of U.S. laws. These early notifications can also help mitigate the effects of changing economic conditions while growing new business opportunities with lower risk.

Experian has announced that its commercial alerts now enable you to monitor more businesses in more countries with greater precision.

Experian now offers 25 alerts on 8 countries in Western Europe, with 8 more countries coming soon! These international alerts offer the ability to stay up to date on changes such as: change in ownership, business name and address, as well as changes in credit limit, balance sheet information, and company status and much more.

Proactive notifications empower you to act quickly and mitigate risk, collect on overdue amounts and retain your best customers.

Want to know more? Contact your CMA rep today at 818-972-5300 so we can start helping you reduce the risk in your growing business.

Throughout the past several years, CMA’s webinars and events have had the overwhelming theme of utilizing technology to bring efficiencies to businesses. Your CMA team is following this theme. As many of our members have gone through and will go through systems conversions to make their business operations more efficient, CMA is doing the same thing.

I’m happy to announce that our new association management system will be implemented in December to give our customers added convenience and bring CMA internal efficiencies.

Your December statement will be emailed with an electronic link to all primary CMA member contacts. For those members that have designated a billing contact that is different than our main contact, as the primary contact you will be able to set that contact and others up yourself, giving you better control of who should have access to your company details. Through this link, you’ll also be able to view your post-December 2017 billing history with CMA, with the ability to print and save statements and invoices electronically.

Subsequent to the implementation of our new AMS we will be implementing the ability to pay online and hope to have this completed in January. This will mean that members will not only be able to access their invoices, but they will be able to pay electronically.

We thank you for your continued trust and loyalty to CMA, and we look forward to continuing to listen to our members wants and needs. If you have any questions, please feel free to call me directly at 702-259-2622.

“The world hates change, yet it is the only thing that has brought progress.” -Charles Kettering

Kim Lamberty, CAE, is Vice President of Operations for CMA. She can be reached at 702-259-2622 or klamberty@emailcma.org.

The recent outbreak of natural disasters left certain areas of the country reeling. No power, no water, and blocked roads resulted in no way to distribute product or services, and no way to collect receivables. Businesses both large and small were in a panic. Why? No cash flow. How are they going to get paid? The answer is – they are not! At least not in the near term. Whether a customer is in collection or about to be, the problem is the same – they can’t pay their debts. As a vendor, your problem is how to help them stay in business so that you have a chance of getting your money – eventually!

HOW TO IMPROVE YOUR CHANCES OF GETTING PAID

Obviously, you are going to have to wait for your money, so making it formal by giving them a moratorium on payment is a good first step for alleviating some of your customer’s/debtor’s stress and it makes you look like a good guy and may put you at the head of the line when they are operating again. Of course to do this you need to communicate with them, which could be a problem if they have no power, but eventually you will get through and giving them an extra 45 to 60 days for meeting their obligation will be very welcome and improve their odds of staying in business.

However, planning is everything and the very best way that you can increase your customer’s chances of surviving a natural disaster is to convince accounts that are in potential disaster areas (Florida, Texas, Louisiana, Oklahoma, Kansas, and California are some localities, but they can also be affected if they are hundreds or even thousands of miles away) to plan in advance for its occurrence. Not a simple problem as most people are resistant to this type of suggestion, even if they know it’s for their own good.

If a business is forced to cease operations after a natural disaster they run a substantial risk of never opening their doors again. You can’t effect the probability of a natural disaster, but you can prepare for it. Having a well thought out disaster plan and sufficient insurance will help your customers recover when disaster strikes. The following are some of the things they need to do if they want to survive a natural disaster.

CRITICAL COMPONENTS OF A BUSINESS RECOVERY PLAN

They need to:

Create a detailed disaster response plan and make sure employees know whom to notify and what to do to limit employee casualties and property losses.

Practice the procedures set out in the disaster response plan on a regular basis.

Prepare a list of critical phone numbers and email addresses. They will want to get in touch with key people after a disaster. Include local and state emergency management agencies, major clients, contractors, suppliers, realtors, financial institutions, insurance agents and insurance company claim representatives.

Develop a strategy to communicate with customers to limit loss of business.

Develop answers to the following questions:
While a natural disaster is occurring, will they need a back-up source of power and a back-up communications system?
What impact will a natural disaster have on their employees’ ability to return to work and their customers to receive goods or services?
What impact will a natural disaster have on their plant and equipment?
If their business escapes the disaster, do they still have a risk of significant losses due to the inability of suppliers to deliver goods or services?
What is the financial impact to their business if it shuts down as a result of a disaster for a day, a week or longer?
Can they run their business at another location if they cannot afford to curtail operations?

Make sure they back-up computer files and critical systems every day and also maintain a copy off-premises (the cloud). Store copies of all critical records and documents in a safe deposit box and keep them current.

REVIEW THEIR INSURANCE COVERAGE

They need to sit down with their insurance broker and make sure their business is protected. They need to review their insurance policies to ensure there are no gaps in coverage and that every type of insurance they need to guarantee their business’ survival is in place. Make sure they are covered for business interruption and the cost of repair or rebuilding. If their policy does not cover flood or earthquake damage they may need to buy additional insurance. Other types of specialized insurance that may be pertinent to their business should be discussed. As insurance is not cheap, they’ll need to make some decisions on a risk – reward basis as to how much coverage they can afford.

CONCLUSION

We have covered some of the basics for preparing for a natural disaster with the expectation of hoping to help you improve the chances of your customers’ surviving. We recommend that you check out the internet for business continuity and disaster recovery templates that go into far more detail than we can in this short article and recommend to your customers that they review them and plan accordingly. If a natural disaster strikes some of your customers there is little you can do to help them if they haven’t planned ahead. If you want to improve your chances of ever collecting what they owe you they need to stay in business and anything you can do to reduce the likelihood of them failing is in your best interests.

Sam Fensterstock is Vice President of AG Adjustments, CMA’s chosen collections partner. For over 40 years, AGA has been the most respected commercial collection agency in the nation. The company assists corporations with improving cash flow, while preserving a positive image with customers. It accomplishes this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

Recent news that Sears Canada has failed in its efforts to compete an effective reorganization, and will be forced to liquidate through Canada’s equivalent of Chapter 7 bankruptcy, has brought to light a point often ignored in analyzing your strategy with respect to money owed to a customer in bankruptcy.

For example, pretend for a moment that you’re on the committee in the Sears case. You’re meeting with attorneys and discussing potential bids. Something seems strange about these bids and you’re unable to get behind the low prices being offered. Additionally, your attorney tells you that you’ll get more back on your claim through a liquidation. Well, this is obvious, right? Vote against the plan for a sale and go to liquidation.

Retail bankruptcies are throwing a huge wrench in the business landscape these days. Liquidations are becoming more and more tricky because buyers are becoming harder to find. With so many bankruptcies in one sector, valuations are inherently lowered. According to a recent article in the American Bankruptcy Institute, trade creditors reaching compromises in retail bankruptcies are causing a real positive impact on the road to recovery. If investment firms who are owed enormous amounts of debt liquidate, the recovery for trade creditors is very little. However, a meaningful reorganization means money coming back to the creditors’ companies in the form of settlements and continued business.

As a credit manager serving on a committee, one may be tempted to take the money and run as quickly as possible. However, as this article posits, sometimes it’s much better to have a long-term relationship that a small instant recovery. The over-leveraged company is more and more commonplace after nearly 10 years of interest-free money. Credit managers who take a more long-term view of the issue may end up with a better impact for their company than simply taking what a liquidation would allow. Next time you’re faced with this situation, feel free to call CMA Adjustments for more information on how a different view of your bankruptcy claim could provide a positive impact on your company in the long-term.

Houston, much of Florida, all of Puerto Rico. This has been a hurricane season for the ages. What do you do when, practically overnight, normally prosperous and prompt-paying customers are, at least temporarily, ruined by wind and water? This company shows the way.

Kichler Lighting got lucky this year. Few customers were affected by the hurricanes and even those did not suffer much damage. But back in 2005 when Katrina ravaged New Orleans it was a different story entirely. Several customers lost all or major parts of their businesses to the catastrophic flooding. Kichler pitched in to help immediately.

“First we delayed the due dates on their invoices and worked with them as to what they thought would be an appropriate time frame,” explains David Feigenbaum, CCE, Director of Corporate Credit. No one asked for anything outlandish, so they were all given what they asked for and assured that Kichler would be there ready to help with new shipments whenever they needed them.

One customer had two locations, both in the city. One was totally devastated, to the point where he never reopened it. Consolidating the stores and getting them operational took months. “We just worked with him and told him nothing would be due until he was ready to go,” says Feigenbaum. “The big thing these folks have to go through is insurance claims. They take months.

“We worked with a few customers who were out of business for months, carrying the debt until such time as they were back in business. Then they needed to restock because everything in their inventories was ruined. We worked out special terms to allow them longer payouts on the new goods so that it didn’t come due until they had the chance to sell it and turn it into cash.”

This year Kichler sent out an email to the sales force immediately after the storms in Texas, Florida and Puerto Rico. “We stressed that we wanted to help and did not want to be part of the problem,” he says. “The email stated that if any customers needed assistance they could either call us directly or go through them. On those occasions where we’ve been asked, that’s what we’ve done.”

A few have asked for some time beyond normal terms because their computers are down, but the requests have been few and far between.

“If someone comes to us and says, ‘My inventory is all wet. I need to restock. I’ve got my insurance check but it won’t cover my loss in full’ we’ll work with them to spread it out and make it fit their cash flow,” he says. “The last thing we want to do is have them have a huge bill come due when their cash flow isn’t healthy. All that will do is make a bad situation worse.”

All of Kichler’s customers in New Orleans eventually recovered and are now back to good health. But the city’s population has shrunk considerably. A lot of people left and never came back.

The son of one of the company’s New Orleans customers moved to Houston after Katrina and is now a very significant customer there. “So we ended up with a new customer in a new place,” notes Feigenbaum. “And the really good news is that he’s in a part of Houston that didn’t get hit by Irma.”

Addendum: At press time, just as we were about press “send” on this week’s tip, we learned that Kichler received the following note of appreciation from a customer:

“I wanted to thank you guys for helping us out on our cash flow issues that we’re in due to Harvey. Thankfully all our employees and myself were extremely fortunate in the storm. We had a couple employees that had minor flooding, one with less than an inch and one with about 6” of water. Our office was untouched and the majority of our customers got through it with very little damage. The biggest issue at the moment is the slowdown of business while everyone is getting back on their feet. Our billing was cut in half but we’re hoping it will bounce back in October.

“Again, thank you for everything you guys do for us. It’s never been over looked or gone unappreciated. We will be catching everything up ASAP.”

Thanks to everyone who participated in CMA’s Member Value Survey last month. Nearly 20% of our members responded, and I would like to share some of the results and insights we have gained from the feedback.

The top 5 reasons that participating members joined CMA were:

1. Networking with other credit professionals (73%)
2. Access to information on potential customers (67%)
3. Obtaining trade references from other CMA/NACM members (60%)
4. Credit education and training (49%)
5. My company was already a member when I started (48%)

Industry credit groups came in at #6 with 41%, but credit groups offer the benefits that members rated as the #1 and #2 reasons they joined (access to customer information and trade references, above).

More than half of all participants feel that the most valuable aspect of NACM membership is being part of a national credit community.

Almost 90% of participating members feel that their companies’ upper management understands the value of CMA membership.

Based on how likely a member is to recommend CMA to a friend or colleague, more than 83 percent of responders said they’d rate CMA at least 8 out of 10 or higher.

Here are a few member comments that best illustrate the survey results:

“Mostly networking and better knowledge of customer paying habits.”

“Be able to get first-hand, latest information about customers.”

“I think it’s very important to communicate with other Credit Professionals. Bringing our knowledge together will help in the success of our departments.”

“The continued education and training is priceless and networking with other credit professionals”.

Here’s what we learned:

Members who participated in this survey want CMA to continue to focus on providing opportunities to network with other credit professionals, access to customer payment information, and credit education and training. Some members suggested that CMA could improve upon those core benefits by encouraging credit group members to increase participation (attendance and data contribution) in credit group meetings, create more credit groups that are better aligned with certain industries, offer more advanced credit education and training programs, and offer an online forum for members to exchange best-practices. Additionally, a number of members suggested that CMA should offer more job-related services (job postings and resume search).

Thank you again to all who participated in our member value survey, and I will be reporting back to our members about the progress we make toward improving the benefits that you have deemed the most important to you and your companies.

We have all heard the expression that “talk is cheap.” Here’s an instance when it’s not: whenever 2 or more competitors get together to discuss the terms of business. In that situation, the potential to cross over into prohibited topics could put all companies at risk. That is one of the main reasons that you have chosen to protect your company by joining an industry credit group facilitated by a representative from CMA.

Your CMA representative monitors all group discussions to ensure compliance with the three statements read at the beginning of each meeting, Anti-Trust, Confidentiality and Anti-Defamation. CMA Group Facilitators have all been trained, certified and are responsible during the meetings (and extending to those conversations in the parking lot) to assure that all members adhere to the guidelines set forth by the government. We listen for any suggestions to restrict free trade or for any attempt to try influencing another’s decision to sell or not to sell an account. If the conversation drifts in that direction, your CMA rep will shut it down.

Sharing historical, factual data on common customers is perfectly legal. We encourage group members to bring new credit applications, slow paying customers and accounts sent to legal to the meeting to alert other members, who will in turn share similar information about their customers with you. The trust built up between competitors allows them to participate honestly and share information in good faith as long as only historical and factual trade experiences are exchanged.

So the next time your attempt at humor is shot down by your group facilitator, think if the punchline falls into one of the 3 statements read prior to every meeting. If it does, he or she has steered your company away from litigation with fees far exceeding the cost of membership for years to come.

We, at CMA, know that your time is valuable, that you are probably wearing more hats then in previous years with a reduced staff. Wasting time is not an option. Our job is to provide a comfortable environment free of distractions for you to gain knowledge, network and to get you back to the office so you can process what you learned quickly, and in turn make quicker, educated credit decisions.

Without a governing body like CMA overseeing your monthly get together, talk could be very expensive.

Tragedy has struck our nation yet again, in the wake of the senseless events in Las Vegas last night, our Las Vegas based team and I are encouraged by the outpouring of love and community support that is occurring. We all knew someone who had a loved one, friend, or acquaintance that was affected by the senseless shootings.

For those who want to help the victims, here are a couple of ways you can get involved:

There is a call to donate blood if you can. United Blood Services is asking donors to make an appointment because of the overwhelming response. Use http://www.bloodhero.com to schedule your donation appointment ahead of time.

Again, it’s amazing to see how communities come together in times of crisis. Thanks to everyone who sent their well wishes to our staff and our Vegas-based members, as we send our heartfelt condolences and prayers to the families of those who were affected by this senseless event.

If your company sells to a customer and delivers goods within 20 days of the customer filing for bankruptcy, one may believe that your company may have an administrative (highest priority) claim for the value of those goods. As many credit managers know, however, the claim under 503(b)(9) of the bankruptcy code has many problematic caveats with the way we do business today.

Many companies use intermediaries like fulfillment houses to deliver goods to customers. This issue has been taken up several times but the recent case presents an interesting twist on the same issue.

The Debtor in this instance, was a billing and servicing platform through which its customers would order items. The manufacturer and distributor would deliver directly to the Debtor’s customers and the Debtor would remit payment for those goods minus its fee, to the manufacturer. The question in front of the court was whether a third-party partner who never possesses the goods, but who possesses the payments for goods recently delivered, constitutes a receipt by the debtor. The court held it does not.

“With continuing complexity in billing and delivery systems in business today, it’s important to consider the implications of third-party partnerships when delivering goods to a party that does not directly owe your company money.”

Current case law requires physical possession of the goods by the Debtor. With third-parties being utilized for help in distribution, billing, customer service and many other aspects of business today, it’s important to understand the impact of everyone in your value chain. At any point, one part of the chain could file for bankruptcy and despite the spirit of 503(b)(9)’s intent to compensate recently-delivered goods, the fact that the end-user doesn’t pay your company directly creates greater risk.

These issues are circling the appellate courts currently and further clarity is sure to develop. One can hope that the spirit of the statute, fairness to trade creditors, is once again respected in light of the complicated supply and distribution chains existing in today’s business climate.

Molly Froschauer is the General Manager of CMA Adjustments. She received her J.D. cum laude from Pepperdine University and her Bachelors from Claremont McKenna College. Before joining CMA, her practice was centered around bankruptcy and other out-of-court debt issues. She’s a member of the Bankruptcy Inn of Court, Los Angeles Bankruptcy Forum, and the Turnaround Management Association.

Your internal efforts have failed to collect a severely past due account. Now, it’s time to call in another source. But who should you call, your corporate/general counsel, a collection attorney or a collection agency? Let’s look at all three and determine what your best course of action is.

USING YOUR CORPORATE/GENERAL COUNSEL

Corporate counsels are lawyers who work directly for a business and general counsel is a law firm that is on a retainer to work a certain amount of time each month for your company. As such, all their time and energy is spent on their employer’s requirements in various capacities and do not have a specific focus in collections. Their main job is to provide legal representation to their employer and their employees. Specifically, they will offer advice on legal matters and perform legal research for the benefit of the corporation. Additionally, they will offer opinions on issues like contracts, property interests, collective bargaining agreements, government regulations, employment law and patents. They may also represent their employers in court on defense matters and they are also utilized in forwarding litigatory matters to experts in pending litigation matters.

Now when it comes to handling a collection situation, yes, they can handle it, but will they do the best job for you? If you have a large volume of placements can they handle it? Corporate/general counsel typically have little (if any) collections experience and very little of their day-to-day time is focused in this area. Collection agencies and collection attorneys have specific training and experience in handling collections that a corporate/general counsel usually does not have.

Also, if you use your corporate/general counsel to file suit against a customer who operates in another state, normally they file the suit where your company is located as it is much easier to do. However, once you obtain a judgement, you will need to find an attorney in the local jurisdiction of your customer to domesticate and enforce it. Now you have two attorneys involved, a delayed resolution and increased expense.

Using your corporate/general counsel to collect a debt may be easier as they are either part of your company or are local and on a retainer and you might think your costs will be less but the retainer is only a charge against their hourly billing. A collection matter can cost a lot of money to pursue with no guarantee of success based on an hourly structure, especially if your customer files a counter claim, it could wind up costing you much more in the long run. So, will using your corporate/general counsel get the best results? We do not think so.

USING A COLLECTION ATTORNEY OR A COLLECTION AGENCY?

Based on the previous assessment the choice is now a collection attorney or a collection agency? There are hundreds of collection attorneys listed with the Commercial Law League of America and all of them have experience in collections and many do a great job. But, if your customer is delinquent and you cannot get paid, should your first stop be a collection attorney or a collection agency? This is a choice that companies frequently face as they try to find a collection professional to handle their placements who will provide the greatest chance of collection in the shortest period of time with the lowest costs. We think the decision is a straight forward one.

To further explain, let’s look at the differences and why one choice is rather clear: collection agencies work on a contingency basis. That is, they will keep a portion of what is collected. If nothing is collected there is zero fee. When they do collect, a contingent fee is charged on the amount collected. Often these fees can be negotiated based upon the volume of accounts placed, size of the account and circumstances such as age of invoices, disputes, etc. A collection agency’s goal is to collect to collect your money in-house in the shortest period of time, without having to use an attorney. When a collection agency has to forward a file to an attorney, it is their last resort in trying to get your money.

Collection attorneys, while many may work on a contingency basis, there are those that work on a fee for service basis. They will earn a fee based on the time spent regardless of the outcome. Additionally, attorneys earn their living by suing and filing a lawsuit costs money. Included in the suit costs will be the cost of filing a summons and complaint, serving the debtor, and various required attorney actions during the lawsuit. Collection attorney’s make more money litigating. Unnecessary lawsuits are filed frequently and as the collection effort is non-apparent during the time of litigation, many times your customer can go out of business, pay other suppliers instead or file a counter suit, which will further increase your exposure. Once a lawsuit has been filed you are now at the mercy of the courts and the time frame to get you paid just got extended 6-12 months.

Collection attorneys are also normally regionalized to geographic locations. They usually do not have the reach to handle accounts in multiple states let alone matters that are international. Furthermore, if your placements are spread though out the country or around the globe you have much more “clout” when dealing with a national or international collection agency as opposed to a local law firm.

One of the critical difference between collection agencies and attorneys is that collection agencies are equipped to handle a large number of accounts. They are specifically designed and have the personnel and computer capability to deal with thousands of accounts at any one time and handle files that range in dollar amounts from $100 to millions of dollars. Collection attorneys rarely have the capability to properly control a large volume of collections files and do not typically want to handle low dollar files. Agencies are designed with this capability, in mind. If they cannot successfully handle high volumes and low dollar files they will not be a very profitable business. Attorneys have assistants and associates handling incoming calls and payments while working on other more important business, themselves. They are law firms not collection agencies and therefore do not operate like a traditional collection agency

If litigation is needed using a collection agency is still your best bet as collection agencies usually have a network of local attorney’s that they utilize to bring suit, secure judgments and collect in a creditors behalf. They are staffed to “quarterback” attorney efforts to move the case as swiftly as possible. When questions arise, collection agency staff are versed in the various nuances of the litigatory process and are well prepared to get you the answers needed quickly and efficiently. Reputable agencies are fully bonded and insured and only utilize attorneys who are equally bonded and insured to provide creditors with maximum protection.

As collection agencies handle a large volume of accounts they also place substantial business with local law firms. Agencies have vetted the law firms they use who they feel do the best job in securing recovery for the creditor. Furthermore, an agency that is national in scope actually has more clout with a given law firm than any single creditor. Those attorneys that accept business from both collection agencies and credit grantors are bypassing the triadic system that has been in existence for over 100 years. It is unethical to accept business from a creditor as well as a collection agency. While you certainly want recovery of your funds we would believe that it should be accomplished in the most ethical manner possible.

CONCLUSION

Collection agencies FULL time responsibility is to collect the delinquent debt of their customers in the shortest period of time without litigation. Collection agencies are set-up and geared to making a maximum number of attempts at third party intervention to bring forth payment, quickly. When a customer asks that the agency call back next Tuesday at 10am, the agency has software to ensure that the call is made next Tuesday at 10am. This is what they do all day, every day. This is not how your corporate/general counsel or collection attorney is set up to operate and therefore they cannot deliver the results that a collection agency can. Also, if litigation is needed a collection agency will hire for you the best collection attorney in the jurisdiction of your customer, contain your costs and make sure the account is handled as efficiently as possible and bring you the results expected. A collection agency’s goal is to collect your money in the shortest period of time and that means doing It ethically and as expeditiously as possible.

Sam Fensterstock is Vice President of AG Adjustments, CMA’s chosen collections partner. For over 40 years, AGA has been the most respected commercial collection agency in the nation. The company assists corporations with improving cash flow, while preserving a positive image with customers. It accomplishes this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

Those companies which are still following credit card anti-surcharging litigation know that the case of Italian Colors Restaurant v. Harris (as Attorney General of the State of California) has been sitting still before the 9th Circuit Court of Appeals for more than two years. The United States District Court for the Eastern District of California, on March 23, 2015 ruled against the California statute which prohibits the pass-through of credit card surcharging. The pertinent statute (California Civil Code section 1748.1) says: No retailer in any sales, service, or lease transaction with a consumer may impose a surcharge on a cardholder who elects to use a credit card in lieu of payment by cash, check, or similar means. A retailer may, however, offer discounts for the purpose of inducing payment by cash, check, or other means not involving the use of a credit card, provided that the discount is offered to all prospective buyers.

The U.S. District Court found the statute to be unconstitutional and permanently enjoined its enforcement. The California Attorney General filed an appeal to the 9th Circuit Court of Appeals and there the case has sat. It is this writer’s impression that the 9th Circuit was waiting to see what would happen with the New York case of Expressions Hair Design which was to be heard by the United States Supreme Court.

On March 29, 2017, the U.S. Supreme Court vacated the decision of the 2nd Circuit Court of Appeals which left the New York statute to be deemed unconstitutional as District Court Judge Rakoff had determined. On August 17, 2017, the 9th Circuit Court of Appeals finally heard oral argument on the Italian Colors v. Becerra (the current Attorney General of California substituted for Harris). What was most interesting was the Attorney General’s statement that California permits dual pricing as long as it is clear and conspicuous. He said that the statute means a merchant cannot post a single price and then add on a surcharge.

A strict reading of the statute would not agree with that statement. The 9th Circuit panel often referred to the Supreme Court decision in the Expressions Hair Design case and seemed to be leaning towards mimicking the Supreme Court in declaring the California statute to be unconstitutional and allowing a surcharge to be added provided it is clearly and conspicuously noticed. It was also interesting to note that both sides consistently argued that the surcharge prohibitions exist to protect consumers. This supports the opinion that the passing through of credit card surcharges is perfectly permissible for business-to-business transactions. It may take several months for a decision to be handed down but at least the 9th Circuit has moved forward on this matter.

WANDA BORGES, ESQ. is the principal member of Borges & Associates, LLC, a law firm based in Syosset,New York. For more than thirty years, Ms. Borges has concentrated her practice on commerciallitigation and creditors’ rights in bankruptcy matters, representing corporate clients and creditors’committees throughout the United States in Chapter 11 proceedings, out of court settlements,commercial transactions and preference litigation. She can be reached at 516-677-8200.

“We have lien rights and we don’t need collection agency”. “We have credit insurance and we don’t need a collection agency”, “We factor our receivable, so we do not need a collection agency”. Are any of these statements 100% accurate? We hear these statements all the time and the answer is no.

Chasing debts can be a difficult and sometimes impossible job for any credit department regardless of your resources. As well as being time consuming, the problems associated with managing delinquent payment and writing off bad debt can be crippling to your company. At AGA, we believe in a proactive “all-in” approach using all the credit and collection management tool and services available to you that will help you avoid many of these complications.

Your perspective regarding how to manage the optimum credit department will shift and change depending on your company and industry. As with any career, your career in commercial credit is an evolution. I’d argue credit and collections is the ultimate onion profession, layered; Regardless of how long you’ve been in the credit profession the best of the best keep peeling back the onion learning more, trimming days.

For those in the construction trade it’s all about secured transactions and the lien and bond process. Are preliminary notices prepared timely and accurately, are deadlines being managed, liens filed correctly suits initiated on time? Some credit managers limit their focus to the collection efforts relating to the owner via his/her property as collateral or through a payment bond on a public job. We do not think you should limit yourself, think “all-in” with your credit tools. Obviously, you’ll need to maintain your rights efficiently in those construction situations where the dollars justify the expense, but what about putting pressure on your debtor? Think “all-in” and place the customer with a collection agency and pursue aggressive 3rd party collections in conjunction with the ladder of supply pressure. Even a personal guaranty, not typically used in construction credit, can assist your collection agency during their process.

The job is get the cash thru the door as quickly as possible. In the construction market, resolving your delinquencies from the bottom of the ladder of supply (debtor pressure from your 3rd party agency) in conjunction with pressure from the top of the ladder (serving your notice and filing your lien to engage the property owner and general contractor to force funds downward) can pay dividends. Save time and money, think “all-in” with the addition of 3rd party agency pressure being placed on your debtor simultaneously will typically help resolve your claim faster than simply serving and filing a notice or lien. In most cases, without the expense of filing suit against a payment bond or foreclosure, you won’t be giving up your rights to proceed should that need arise. Lastly, don’t assume your notices and liens are going to be 100% bullet proof, when it’s time to file a lien it’s time to place the account for collection. Of course, it’s important to work with an agency that understands construction credit.

Credit Insurance is another tool. It is commonly used to increase sales, increased borrowing availability, and help prevent catastrophic loss. The cost of credit insurance is based on the accounts that are subject to the insurance and their inherent risk. The cost for the policy will be a percent of your sales and depends on many variables, including trading history and historical debt loss of your company, your trade sector, and your customer portfolio.

Deductibles for credit insurance can also be an issue. The analysis of the solvency of your clients is followed by the setting up of limits carried out by the insurer. Credit insurance covers your company for loss of the credit insured, but rarely covers 100% of your accounts receivable, it’s usually up to a predetermined percentage. Depending on the risk category, the insured’s deductible can vary between 5% and 20%. The deductible is the amount that the insured must pay toward his own losses before he can recover from the insurer. Like any insurance submitting a claim can affect your premium therefore your “all-in” approach should include 3rd party collection efforts prior to submitting a claim to your carrier thereby reducing your need to submit the claim, paying the deductible and most importantly getting you paid faster.

Factoring is another tool that is used in many industries where extended terms are granted like apparel and furniture. However just because you have factored your receivables doesn’t mean that your fully protected. The most common type is Recourse Factoring where if your customer does not pay the factor on the factored invoices, you must repay the factor and collect your delinquent customer on your own. The other type is Non-Recourse Factoring where if your customer does not pay due to bankruptcy or insolvency you do not need to re-pay the factor. Given that Recourse Factoring is the most common, just because you have it doesn’t mean that you will never need to engage with a collection agency and sometimes you may have to go “all-in” and leverage every resource you can to help you collect what you are owed.

Conclusion

Waiting until customer’s invoices are past due is still a typical approach many credit & collection departments take to manage their accounts receivable, but this just creates problems and leads to a greater probability of incurring bad debt. Mitigating credit risk from the start, with an “all-in” strategy will enable you to better manage your accounts and prevent cash flow problems in the future.

Today, many organizations both large and small are taking a closer look at their credit & collection management process. Many have taken this analysis a step further by addressing all aspects of their credit process performance including efficiency, cycle times, available outside credit tools and their connection to performance. Understanding all the tools of your trade; To include credit applications, personal guarantees, credit reporting/monitoring, security and the utilization of a professional, methodical collection agency is the starting point then determining the combination that’s right for your business will have your department consistently in the best possible position to get paid, that’s “all-in”.

Sam Fensterstock is Vice President of AG Adjustments, CMA’s chosen collections partner. For over 40 years, AGA has been the most respected commercial collection agency in the nation. The company assists corporations with improving cash flow, while preserving a positive image with customers. It accomplishes this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

Having just completed a very informative Industry Credit Group call, I thought for a minute of the companies that did not participate on the call. Most of them contributed accounts to the monthly Past Due Report, many with considerable dollars in the 90-day past due column. That satisfied one part of their group responsibilities, yet by not attending, they lost out on valuable trade info about the accounts they had reported.

Had they been on the call or at the meeting, they would have heard two industry leaders give vital information on accounts they listed. They reported that they no longer sell to that account because of extreme slow pay, information not on the report but of great value. Had they been on the call or present at the meeting, they would have also heard about a major problem affecting payments on a large construction project that many suppliers are involved in or sell to a company who is. Again, this information was not on the report but of extreme importance. In fact, because the people on the call were major players in the industry, they knew something about most of the non-attendees reported accounts.

Numbers on a report do not always tell the entire story. Were you aware that there is a new A/P person at ABC Electric or that a Home Deport opened across from Acme Hardware causing a 60% drop in business? Did you know that a mutual customer is only cutting checks once a month or that Smith Food got hit with a large Tax lien? Information like this is routinely exchanged on these calls/meetings.

Only by attending the meeting/call can you be sure that you are getting the complete picture on the financial stability of your customers. The information is there for the taking. Insist on it by making it a priority to be at every group event and asking questions.

A traditionalist. A pragmatist. A very nice man. These were the thoughts that first ran through my head after hearing the news that Harold Fraizer, Director of Credit for Reliance Steel & Aluminum Company, passed away suddenly last week on July 18.

I was introduced to Harold in 2013 over lunch at the Grand Café in the Omni Hotel, just walking distance from Reliance’s downtown Los Angeles office. I was invited to chat about CMA and explore what the Association could do to support the credit teams at Reliance Corporate and at the many Reliance branch locations in California. What I found was a long-time credit professional who cared deeply about the credit profession and the people he supported. He wanted them all to have the best tools, resources, and training available so that they would be successful in their jobs. Clearly, he was a mentor as well as a leader.

Thus began a tradition of meeting for lunch about every six months or so, where I came to hear what Harold and Brian Lacey, his corporate credit manager, had to say about the state of credit.

This past April, I was thrilled when Harold agreed to participate on a panel discussion for our CreditScape Spring Summit. I interviewed him a few weeks before the event to help us both prep for the panel. During our discussion, he shared with me that Reliance concentrates on the front-end process and good credit management. He wanted his branch’s credit operations to focus on making good credit decisions and was willing to provide many options for tools and resources that would help accomplish that goal.

When I asked Harold about various automation tools that he was using or considered making available to his vast network of Reliance credit operations nationwide, he made it perfectly clear where he stood on the topic. “Credit’s not hard,” he said, “but what sets it apart from accounting is that it’s an art as well as a science. We don’t believe you can automate credit decisions. There will always be a role for the credit professional in making the final credit decision.”

What I learned from Harold is that success in credit is driven by the fundamentals – customer due diligence, smart data analysis, strong customer relationships, and good decisions. Automation will continue to drive modern credit processes, but can’t replace good professional judgement.

“You’re a credit manager – invest your time looking at all customers, not just the ones that are in front of you on the credit applications.”

I had lunch with Harold and Brian last month at our regular spot, the Grand Café. I asked Harold about how senior finance executives view the role of credit. He dismissed the idea that credit can be spun as a profit center. “It is a cost center, but if you let me do my job, I’ll save you a lot of money.”

On behalf of the staff and members at CMA, our deepest condolences to the Reliance Family for your loss.

Mike Mitchell is the President and CEO of Credit Management Association.

CMA Adjustments General Manager Molly Froschauer has contributed to NACM’s recent the Manual of Credit and Commercial Laws. The publication updates an older version that was available previously.

In the Manual, Froschauer discusses alternatives to bankruptcy, a topic she regularly consults CMA members and their creditors on. The latest version of the Manual of Credit and Commercial Laws now comprises four volumes that either may standalone or continue to serve as a cohesive and comprehensive set.

Volume IV includes:

• Reclamation, Stoppage in Transit, New Administrative Claim in Favor of Good Suppliers, and other Return of Goods Remedies
• A Creditor’s Guide to the Bankruptcy Process
• Alternatives to Forcing a Financially Distressed Debtor into Bankruptcy

We usually associate credit fraud with the impact it has on individuals in the form of identity theft or phishing scams and the personal financial problems it causes, but what about businesses? What is the incidence of B2B credit fraud and is it a major problem?

Yes, it is a major problem. According to credit reporting agency, Experian, B2B fraud costs US businesses “more than $50 billion annually” and most analysts believe that that number is too conservative. It is also assumed that the incidence of fraud will continue to increase as the use of various electronic payment methods continues to grow.

HOW EXTENSIVE IS THE PROBLEM?

For an overview of the problem let’s take a look at some results from the Association of Financial Professionals (AFP) “Payments Fraud and Control Survey”, published in March 2015:

Some highlights from this survey are:

62% of companies were subject to payments fraud in 2014.

The most-often targeted payment method by those committing fraud attacks are checks. Check fraud also accounts for the largest dollar amount of financial loss due to fraud.

The second most frequent targets of payments fraud are credit/debit cards.

92% of survey respondents firmly believe EMV- enabled credit/debit cards will be effective in reducing point-of-sale (POS) fraud. EMV- Europay, MasterCard and Visa — is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.

61% of survey respondents believe that Chip-and-PIN validation will be most effective in preventing credit/debit card fraud.

Business fraud can devastate a company and as there are very few external protections it is up to the business to protect itself. A company must be aware of the various types of fraud that it may be subjected to and develop methods for protecting itself.

WHAT ARE SOME OF THE DIFFERENT TYPES OF B2B FRAUD?

There are many different B2B fraud schemes. Here are a few of them:

Account Takeover: This is similar to the phishing and telephone scams that affect personal identities. Here credit card or account information is intercepted and later used to place orders or otherwise defraud a legitimate business. This particular type of fraud accounts for a large percentage of B2B fraud occurrences.

Business Identity Theft: Here a scammer opens business accounts under the name of a legitimate business. The applicant acts as the business owner (or a representative) and utilizes their contact information to apply for credit or open accounts.

Commercial Bust-out: The culprit opens several lines of credit with the intention of eventually abandoning them once the credit limits have been reached. This requires that a good credit history be fabricated so that limits can be increased and maxed out right before the perpetrator disappears. This type of fraud results in millions of dollars of losses every year.

Never Payment: Here a business or individual opens a new account, by materially misrepresenting itself. They will obtain the maximum credit possible, but never make a payment.

Shell Companies: These are companies that are set up solely for the purpose of committing fraud. The entity will not sell a product or provide a service. Many times they are used to launder money. They rarely have a physical location, and if they do, it may be a storefront or offshore.

Bleed-outs: This method of committing fraud is similar to a bust-out. However, it is committed from within by insiders. Employees commit this type of fraud over a long period of time. They bleed out assets, leaving the company unable to pay its bills.

SOME CHARACTERISTICS THAT MAY INDICATE A POTENTIAL PROBLEM

Individuals and groups committing these types of frauds will often display many of the same characteristics. The following are some of the things you should look for:

Companies Without Long Histories: Typically, companies with longer track records are safer to do business with because they will have more credit history and references to check. The shorter the life of the company, the less you will have to work with.

Suspicious Changes in Ownership: A well-established company, with good credit, is taken over by a new group that tries to hide the change in ownership. This may signal a potential problem. It may be an indicator that members of the new owners are committing fraud.

Questionable Financial Statements: Mistakes or suspicious items on a company’s financial statements may be a harmless accounting error or signal a real problem. A detailed financial analysis is necessary before doing business with this company.

Fraudulent Credit References: False credit references on a credit application are a warning sign to forget about doing business with this applicant. Unless the applicant can prove it’s a clerical error and has other good references, doing business with this entity is an invitation to be scammed.

No Receivables: If a company’s financial statements do not list any receivables, assuming they are not a cash only business, they are probably a phony shell company that is not providing any goods or services to customers. Do not extend this company a line of credit.

HOW DO YOU PROTECT YOUR BUSINESS FROM B2B FRAUD?

Validate All Information

The easiest and most important step in B2B fraud prevention is to verify the information provided by companies that want to do business with you.

This means you need a credit application (see our blog on credit applications). All the information provided needs to be thoroughly reviewed and verified. Make sure everything on the application is accurate, and ask questions if it is not. Any material errors are a reason not to do business.

Additionally, if your business is contacted by a bank, credit card company, or government agency, don’t provide any sensitive information before verifying the legitimacy of their request.

Utilize External Credit Sources

A business can pull a credit report on another business to ensure that they are dealing with a credit worthy company. Unlike personal credit, which is protected by the Fair Credit Reporting Act (FCRA), anyone can pull a business’s credit report at any time without permission.

Utilize Fraud Detection Tools

Utilizing a fraud detection tool like Experian’s National Fraud Database allows you to compare credit applications and other information to current fraud records stored in a national database. If the applicant is in this database you want to be very careful about doing business with them. COD may be your only option.

Ongoing Transaction Review

Review your banking and credit accounts on a regular basis. Not doing so can leave you and your business a victim of fraud. Initially, transactions tied to fraud or illegitimate charges may not be large enough to indicate a problem, but by monitoring your accounts on a regular basis, you’ll be able to spot fraudulent transactions before real damage has been done.

Staff Education

Make sure you educate your employees on the various types of fraud and how to prevent it. You will sleep a lot better knowing your staff has the ability to protect your business against scammers and con artists.

CONCLUSION

B2B credit fraud is becoming more and more of a problem. Important business, financial and personal data are increasingly being compromised. Preventing and defending against B2B credit fraud is a challenge for companies. But you can limit your exposure and minimize losses due to such activity. Being aware of the problem is an outright necessity and implementing the protective measures described above will help reduce most of the risk of B2B credit fraud.

For over 40 years, AGA has been the most respected commercial collection agency in the nation. We assist corporations with improving cash flow, while preserving a positive image with customers. We accomplish this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

Since my recent return from Credit Congress, NACM’s annual gathering of credit professionals from all over the country, I have been reflecting on how CMA, a proud NACM Affiliate, can best support the credit function and profession. I spent most of my time at the conference talking with our members at the trade show and at special networking events, meeting with my NACM counterparts representing the two dozen other affiliates throughout the U.S., and meeting with many of our strategic industry partners. Unfortunately, that left little time to attend the educational sessions, so I will leave it to the members who attended to shed light on the value of the breakout sessions.

Expo exhibitors reported that NACM members demonstrated a healthy interest in learning about the tools and resources currently available to help them better manage risk and accounts receivable, and become more efficient through automation. As a credit professional, you should be interested in learning about what’s available because these are the tools that are already transforming the way that credit is practiced. If you are at the beginning or middle of your career, a good understanding of the latest and greatest credit tools and resources will give you a competitive advantage when advancing at your current company or in the event you want or need to change jobs. If you are nearing the twilight of your career, this is your opportunity to set up your succession team for success.

NACM’s long-standing partner UTA announced a new surcharging solution for credit card services developed for NACM members, which will allow companies to surcharge their customers to cover credit card fees where allowable. This is a tool that will help our members who accept credit cards payments to save money on many, if not all, of their credit card transactions. CMA will be helping UTA representatives connect with our members that could benefit from this service.

I attended partner meetings hosted by Dun & Bradstreet and Experian. Both global bureaus reaffirmed their commitment to the NACM channel, and we got another preview of D&B’s new product, D&B Credit. Training programs have already been set up so that we can help our members better understand these new tools that are available to them.

At the trade show, I saw a growing list of technology tools that can significantly improve the effectiveness, while lowering the cost, of customer risk assessment and accounts receivable management, which is reason enough to check out these tools. Another reason that credit professionals should be aware of what tools are available: the knowledge increases your personal value. At CMA, we have seen an awful lot turnover and consolidation in credit jobs, and the more you know about what tools are available and how they work will give you a competitive advantage in the job market. Staying on top of new developments in the field reminds me of something NACM Board Chair Jay Snyder of Tech Data said at the General Session — he believes that all credit professionals will have to handle at least one global transaction with in the next five years. What are you going to do to prepare for that?

Sometimes it seems overwhelming to me how many tools and resources are out there today to support the credit function and profession. With the growing demands on the credit department, I can only imagine how overwhelming it must be for our members to keep up with all of it. That’s why CMA should play the important role of staying on top of everything that the credit service industry has to offer. We hope that you will look to your association for help in navigating the ever more crowded landscape of tools and resources available to help you manage cash flow and risk. I invite you to use your Industry Credit Group, or CMA contact person, to discuss some strategies to implement, and through the collective knowledge base of your peers and staff, we’ll try to help you find that solution.

Let me end my Credit Congress reflection on a congratulatory note. CMA members who attended the conference had the pleasure of seeing one of their own receive recognition on the national stage – Melissa Kobus, CCE, Assistant Director of Credit at Walters Wholesale Electric in Signal Hill, CA received the NACM CCE Designation of Excellence Award. Congratulations Melissa on a well-deserved award, and thanks for giving all of us a very proud moment.

What did you take away from Credit Congress? I welcome your comments in the text box below.

Glendale, CA (June 27, 2017) – Credit Management Association (CMA) has announced plans for a Spring CreditScape Summit and Annual Meeting, a two-day event which will feature educational content that addresses how your company and credit operations can manage change in these turbulent business times. The event follows up several successful and highly-rated CreditScapes in Southern California, Las Vegas and Sonoma.

The CreditScape Spring Summit and Annual Meeting, taking place April 4-5, 2018 at the Hyatt Regency hotel in Anaheim, CA, will feature workshop exercises, peer panel discussions, expert practical advice, and networking with other credit professionals.

“CreditScape was born out of feedback from members who asked us for help with making their business processes more efficient. Survey results showed us that members learned a lot from subject matter experts and seasoned credit professionals sharing their experiences through discussions and interactive workshops. We plan to take that feedback and build a strong, expanded program for next Spring,” said CMA President and CEO Mike Mitchell.

“We’ve been listening to feedback from the past event surveys, from conversations with members, and in our Group meetings recently. In these turbulent business times of consolidation, automation and reorganization, the theme we heard most often is that companies are always looking for ways to deal with change. We are currently developing content around that overall theme,” Mitchell added. “We will continue to strive for a unique learning and networking experience that incorporates the latest techniques in content delivery for adult learners. Our goal is to create a thought-provoking and practical meeting experience that produces valuable take-aways and sustained value for participants and their finance and credit departments.”

Senior-level credit executives will be invited to attend the Credit Executives Symposium on April 3, the day before CreditScape begins, at the Hyatt Regency Anaheim. The one-day event offers a roundtable discussion of high-level business issues and trends, best-practices and tips on valuable resources, facilitated by veteran credit executives.

CreditScape Summits are offered in the Spring, focusing on different aspects of the Credit Management landscape. It is one in a series of in-person educational opportunities offered by Credit Management Association. To learn more about the other sessions and topics, visit www.creditmanagementassociation.org/events or call 800-541-2622.

About Credit Management Association

Credit Management Association (CMA), which was founded in 1883, is a Glendale, Calif.-headquartered trade association with approximately 1,100 member companies representing over 250 different business categories selling regionally, nationally and internationally. CMA focuses on providing products and services that allow companies to make informed business decisions based on trade credit. CMA is one of the largest affiliates of the National Association of Credit Management (NACM), whose 33 affiliates serve all of North America. For more information, call 800-541-2622, or visit www.creditmanagementassociation.org.

CMA has hosted several international credit best practices forums, which take place on the third Tuesday every month. As the feedback we’ve received has been overwhelmingly positive, CMA announces the topics and agenda for the rest of 2017, which are listed below. Each meeting will addresses a different international topic, with a 20-to-30 minute discussion led by a thought leader, a question-and-answer session and open forum.

AG Adjustments (AGA), CMA’s partner in commercial debt collections, announced that it has moved its VP of Business Development Patricia Sims out to the west coast to work out of the CMA office in Glendale, CA to help grow its partnership. Sims, who has been with AGA since November of 2015, will be attending group meetings and CMA functions.

AGA is a commercial debt collection agency based in Melville, New York. AGA is a charter member of the Collection Agency Association of the Commercial Law League of America and a Platinum Partner to the Credit Research Foundation. The company’s professional debt recovery team works diligently to turn past due receivables into cash flow that can be reinvested toward your business growth.

As a risk manager, you know that bankruptcy by your customers is one of the biggest threats to try to avoid. But what happens when your good customer files bankruptcy? CMA has put together a series of webinars addressing bankruptcy and what you can do to understand the process in order to help your company get paid.

These sessions will guide you to:

Understand the difference between the major types of corporate bankruptcy, and what happens to outstanding debts when your customers file.

Hello fellow credit professionals. As my tenure as CMA Chairman of the Board started on May 1, I would like to say that I am honored to serve you as Chairperson and look forward to this coming year that is going to be filled with challenges and opportunities for all of us. Just so you know a little about me, I have been in the Credit field for more than 40 years. I spent 20 years in commercial banking and the last 25 years as Senior Credit Manager, Global Credit and Collections for International Game Technology (IGT). I am located at our manufacturing facility in Reno, Nevada, and I have been involved with CMA for more than 20 years.

The commercial credit and collection industry has gone through some major changes over the past decade and they continue today. Advancement in technology, consolidations, down-sizing (doing more with less), a new generational workforce, and global expansion within our various industries have created challenges to all of us in being able to perform our job efficiently and effectively and to meet the everyday demands of our employer.

Our primary goal at CMA is to provide to you the resources, tools and training to meet these challenges. The various services/products we provide such as anscers, credit reporting solutions, lien filings, third-party collection services, industry group meetings, webinars, seminars such as CreditScape, and membership in NACM all play a vital role in helping you and your staff to become more proficient in your job. Proficiency will translate into a positive economic return to your employer.

As this year progresses, I encourage each of you to participate in your respective industry group to gain knowledge and to develop contacts that will provide valuable information that will benefit you and your company. Even if you’re in a group but don’t regularly attend meetings, I feel that the three-hour time investment provides me with real-time vital credit information that I can’t get anyplace else, from my peers in companies who share common customers with me. I also appreciate the “best practices” information I get out of the credit groups that have given me the tools to change several processes that my company uses for the better. Don’t stop there, continue to develop your knowledge of the profession by participating in the webinars and seminars offered by CMA and NACM. Knowledge is POWER.

If any of you have questions or ideas that you feel would be beneficial to CMA, please let me know. CMA is about you, our members. I can be reached at 775-448-0130 or via email at gent.culver@igt.com.

Thank you for reading this and I am looking forward to leading CMA’s Board of Directors over the next year and helping create programs that matter to our members.

As a commercial collection agency, the primary way AG Adjustments (AGA) helps our clients is through the collection of their seriously delinquent debt. One of the ways that our clients can aid in our collection efforts is by having their customers fill out a credit application that provides measures of protection and will increase the ultimate collectability of an account. We cannot emphasize enough how many times we have been successful in the recovery of our client past due monies because of their proactive approach in obtaining a well-drawn up credit application.

As a company working in the B2B space, the credit application is one of the primary tools available for controlling credit risk when extending credit to your customers and protecting your company. A credit application is a contract between the seller and the buyer. A good credit application will benefit the seller, a bad one the buyer. Therefore, it is important that your company be certain that your credit application, whether electronic or in paper form, contains all the safeguards and guarantees available to reduce customer risk. Securing a credit application, while certainly does not guarantee payment, is one of the more significant documents you can obtain in assisting in not only the credit decision but the ultimate collectability of your past due accounts receivable and collection fees. The adage that “the sale is not complete until the money is in the bank’ is as true today as ever. A good credit application will assist in getting your company to that point.

What Do You Need to Know to Control Credit Risk?

The credit application is your first step in gathering information about your potential customer. The more you know about them, the better off you are and the easier it will be to make a good decision and collect the necessary information to determine how much credit to extend them. You can never assume all the information on the application is correct and you will need to do your due diligence to help you verify the information provided you before you grant credit. Therefore, it is important that the sales department make sure that every customer fills out and signs the credit application prior to any goods or services being delivered.

A typical credit application requires that at least the following information be provided:

Name and address of the applicant

Name and address of any parent company

All contact information: I e: phone #’s, e-mail addresses etc.

Type of entity (i.e., corporation, partnership, proprietorship, etc.)

Names of principals/directors/officers

Bank references

Trade references -at least three

Tax ID and DUNS number

Availability of financial statements

Credit limit requested

Applicant’s agreement to payment terms

Applicant’s agreement to interest on past-due amounts

Applicant’s agreement to pay for legal and collection costs

Applicant’s personal guaranty(s) with spouses if possible and authorization to pull personal credit report with SS#.

A credit application serves two purposes: It is a data gathering tool and it is a contract. As a contract, it specifies the rights and obligations of both the customer and creditor. As you are writing the application, bear in mind that it’s a request for credit to be extended and should be written so that it provides your company an advantage if your business relationship fails, since we all know that “credit is not a right but a privilege.” The most important things to consider are:

The signer(s) must be able to legally bind the company. If the signer is not authorized to accept the terms and conditions of the credit application, they can’t sign the application.

If possible, make a personal guarantee part of your credit application. We would recommend that when extending credit to SMB’s that you get the owners and their spouses to sign a personal guarantee. While many personal guarantees have no value, it’s better to have one than to not and if a SMB owner is not willing to sign a personal guarantee, that might tell you something as well. You also want the social security number of the individual signing the personal guarantee so that if you must enforce it, you will have an easier time tracking them down in the event they abscond.

You want a stipulation that the customer will pay interest on past-due amounts and will pay any collection, legal fees and court costs that are incurred because of non-payment. If you do not have this detailed in your credit application, you will NOT be able to collect fees on your debt if placed with a collection agency. In the event of litigation, it is up to the local courts jurisdiction if collection fees, attorney fees and interest will be awarded

You want assurance that only the disputed portion of a past due amount will be withheld.

If you file suit over non-payment, you want it to be as convenient as possible. The choice of venue must be yours. While many creditors will request suit in their local jurisdiction, this is not necessarily in a creditors best interest. The customer’s assets are normally local to their whereabouts. Therefore, in the event post judgment remedies are needed the judgment must be recorded in a debtor’s local jurisdiction to attach assets.

You want authorization to obtain information from credit bureaus, banks and trade references both before authorizing credit and ongoing once they are a customer.

You want current financials and the ability to obtain financials in the future once they are a customer.

Verifying the Credit Application

Once you have the credit application in hand, you need to verify the information it contains. At least three trade creditor references should be contacted as well as their banks to verify the existence of their checking account. You should be sure that all their references are legitimate. If for some reason you can’t contact one, be sure at least that they exist. Any false information on the credit application is a valid reason for not doing business. If the buyer is looking for a substantial credit line, make sure you review their financials, especially a statement of cash flow. If they are operating in a negative cash position you need to be sure that they will have enough cash available to pay you. Limit their credit line or at the very least change their terms if it looks that they may have a cash flow problem.

Once They Are a Customer

Periodic credit reviews are a necessity. Major account defaults can come from existing long-term customers as well as the new ones. Customer credit limits should be reviewed periodically, at a minimum once a year. Get current financials from your accounts annually if possible. Make sure their cash position can support their business. CMA offers many solutions to help you check credit, from bureau reports to credit group meetings, trade references and more. Additionally, obtaining current credit bureau reports on your largest customers, annually, is a good idea. Stay on top of your accounts receivable aging. If a customer is always 60 to 90 days past-due on some part of their balance, they are only one period away from being a problem.

I attended CMA’s Spring CreditScape at the Hyatt Regency in Garden Grove on April 12. Wow, what a great conference, which featured some amazing sessions and speakers. The day started off with the incomparable Wanda Borges, Esq., who led a discussion in hot legal topics in business credit. Ms. Borges answered questions from attendees covering such topics as bankruptcy, preference and credit card surcharges, all topics that clearly hit home with the attendees. Keynote speaker Dan Goldes showed us how to use influence to increase efficiency with influence skills. His interactive session really encouraged all of us to take a step back and practice different styles of influencing people on our fellow attendees before we bring them back to our offices to use them on both our coworkers and customers. The session was educational as well as fun. Next, Kim Howard, Director of Credit Western Region for Cemex, and Wanda Borges, discussed how to automate credit applications and customer onboarding, and the legal implications of doing so. During lunch, CMA had its Annual Meeting and Installation of Officers (which was my last “official” duty as chair of CMA to preside over).

In the afternoon attendees had the opportunity to meet with the vendors to help them learn how to improve efficiencies and reduce internal costs, by using services such as credit card transaction processing, UCCs, credit reporting, customer onboarding, cash application and more. The last session for the conference was a panel discussion (Alvin Moreno, Harold Fraizer, Brian Gausman, Claudia Lozano and Rohit Patel) on implementing efficiencies in the Cash-to-Cash cycle. I personally took several pages of notes that I plan to revisit and consider implementing some of the processes in my own credit department. The event was well worth my day out of the office to learn from the experiences of other credit professionals.

As I wind up my last blog as CMA Chairperson, I have to say that I can’t believe that a year has passed since I was introducing myself to you as chair in this blog last year. Time has just zipped by. I would like to take a moment to thank the very special people on the CMA staff including Diana Escobar, Alan Dicker, Terry Campos and Juliet Churchill for all of your assistance. These people have helped me tremendously through the past three years as Treasurer, Vice-Chair and Chairperson. Also, thank you to my great Executive Committee team (Melissa Kobus, Gent Culver and Pam Craik) for being engaged, interested and available, sometimes at a moment’s notice. And last but not least a big thank you to my boss, Brett Garnett, who has supported me through this journey.

I encourage all of you to get involved in CMA at whatever level you can do, whether it’s participating in an industry credit group, attending a webinar or seminar in person, or volunteering on the CMA Board of Directors. Your participation will only make the association stronger and benefit you (and your company) at the same time.

Tim Cratty accepts CMA Member Company of the Year Award for Jackson Family Wines

It is important for our member companies to participate and allow their employees time to be engaged. CMA membership thrives on participation and it is a struggle to find the balance between company goals and our own personal goals. Giving to the association makes the association stronger. This year, CMA wishes to recognize a member company who lets their credit professionals engage in various credit activities, shares their best practices so others can learn and allows their Customer Financial Services Manager to serve on the board. They are frequent attendees at CMA education events and Group meetings, and are generally engaged in the events of the association for the good of itself, its employees and other CMA members. Congratulations to 2017 CMA Member Company of the Year Jackson Family Wines.

The CMA Member Company of the Year Award was presented during the Annual Meeting portion of the CreditScape Spring Summit in Garden Grove, CA on April 12.

Congratulations to Mark Speiser of Unified Grocers, who was presented with the 2017 CMA Credit Executive of the Year award. This award is given to the credit professional who is a well-respected leader not only within his organization but throughout credit. Speiser is a team player who works hard every day to ensure the credit group succeeds in reaching their corporate and personal goals. He has implemented a number of different programs to improve processes and results. He is an active member in the National Food Service Group and Food, Hotel and Restaurant Group, where he regularly leads discussions to help his fellow credit professionals. He has been in credit for over 23 years, 17 of which have been in credit management.

Speiser is also new to the CMA Board of Directors.

The CMA Credit Executive of the Year Award was presented during the Annual Meeting portion of the CreditScape Spring Summit in Garden Grove, CA on April 12.

Melissa Kobus presents Harminder Dhesi of Jackson Family Wines with 2017 CMA Student of the Year

Harminder Dhesi of Jackson Family Wines was presented with the CMA Student of the Year award at CreditScape. Harminder is working very hard to strengthen his knowledge and expertise in the credit field, as he has started on the course for his certification and has taken 2 of 3 the classes needed to test for the CBA. He also has served as Chair and Vice-chair for his industry credit group, and is actively involved with CMA. His managers and co-workers find him a pleasure to work with and appreciate his proverbial “thirst” for knowledge.

Congratulations to Harminder!

The CMA Student of the Year Award was presented during the Annual Meeting portion of the CreditScape Spring Summit in Garden Grove, CA on April 12.

Congratulations to Bart Frankel, who was named as the 2017 CMA Educator of the Year by CMA Members.

Bart Frankel is recognized as a longtime expert in the credit and collections field. He does various webinars, presentations and specialized training for members of CMA as well as for the companies he has worked for. He teaches the Six Steps in Phone Power Collections, a program that resonates well with anyone in the credit profession, regardless of experience level. His experience runs deep over the past 35+ years.

He is sincere and conscientious during his training sessions, and looks forward to presenting the topic in May to CMA members via webinar.

Congratulations go out to Bart!

The CMA Educator of the Year Award was presented during the Annual Meeting portion of the CreditScape Spring Summit in Garden Grove, CA on April 12.

Being nominated by your peers for an award is something special. It is an accolade just in the nomination itself. It gives you time to pause and reflect on your accomplishments.

Lee Clutter, CBA, the CBA Designation of Excellence winner for 2017, received over 15 letters of recommendation from his peers, coworkers and credit professionals. He has worldly knowledge of credit surpassed by very few. He has been in credit for over 40 years and truly demonstrates credit excellence. He is a second-time award winner, who is actively involved with CMA’s programs and services. Congratulations to Lee Clutter, CBA from Smart Modular Technologies.

The CBA Designation of Excellence Award was presented during the Annual Meeting portion of the CreditScape Spring Summit in Garden Grove, CA on April 12.

The CreditScape Spring Summit, Powered by United TranzActions, an interactive learning seminar and workshop took place April 12 at the Hyatt Regency Orange County. The event helped uncover areas in a company’s credit operations where they could improve efficiency, providing attendees with dozens of ideas to bring back to the office, according to preliminary survey results that were tabulated after the event.

With the common theme of “creating efficiency and reducing costs in the credit department,” attendees commented that the sessions gave them insights on the latest in legal issues affecting the credit department, improving efficiency in new customer onboarding, efficiency in the cash-to-cash cycle, plus services that could help companies realize these efficiencies. Also a hit were the panel discussions where attendees heard from their peers how they have successfully implemented these processes.

Additionally, for the attendees overwhelmingly said they’d recommend CreditScape to a colleague.

Here are some photos from the event:

Plans are forthcoming for CMA’s next CreditScape, which will take place next Spring at the same venue in Garden Grove, CA, April 4-5, 2018. More details will be announced as soon as possible.

Have you checked out CMA’s exclusive anscersX multi-bureau trade credit report that contains the key factors about your customers payment habits from the top three credit reporting bureaus?
The anscersX multi-bureau commercial credit report combines key elements of the data from the three largest trade credit reporting agencies (D&B, Experian and Equifax), giving credit managers the most complete payment story available. The report is affordably priced, which is based on the number of reporting agencies you request. Better yet, anscersX Reports are available on a transactional basis – no contracts, no minimums, no hassles!

My kids find it hard to believe that when I was in school, the place you went to find answers to your homework or to gather information for a paper was the Encyclopedia Britannica. This was several thick books with information on anything you needed, although the accuracy depended on what edition you had. My edition claimed the US had only 48 states.

The current generation has it much easier since Google came along, just enter, click and multiple results appeared with everything you needed.

Your membership in CMA and an Industry Credit Group makes it just as easy. Have a question on Chapter 11 BK; call Molly Froschauer in the Adjustment Bureau. Need an effective Demand Letter, go to the Encyclopedia of Credit. If it is the most current trade information on a customer, draw an anscers report or enter an RFI. Looking for accounts receivable software that is credit friendly, poll your group. Need to further your credit education, CMA has that covered.

If you utilize CMA and the Industry Credit Group as your primary search engine for all credit related issues, the results will reduce your time and expenses.

It will not be necessary to pay your corporate attorney an hourly fee for researching Bankruptcy questions that CMA can answer for free. Whose recommendation means more, salesmen trying to sell you a $100K computer system or someone in your group performing the same job as you using the system? Need to file Lien, get a D&B, place an account for collection, take a financial statement class, start your search with CMA.

You have the support of a Business Association that has been around for over 130 years. Behind each tab on the anscers home page are people waiting to assist you.

Whether you have been in credit for 30 years or 30 days, there are laws and procedures that are changing daily. CMA membership guarantees you the most current edition.

Panelists from leading companies such as Nestle USA, Consolidated Electrical Distributors (CED), Velocity Vehicles, Reliance Steel, Cemex and ResMed will take part in the discussion at CreditScape about how to create efficiency and reduce costs in the credit department.

A complete schedule of sessions and workshops for the CreditScape Spring Summit has also been posted. Keynote speaker Dan Goldes will present “The Influence Edge: Increasing Efficiency with Influence Skills” in an interactive keynote workshop at CreditScape, April 12, 2017 at the Hyatt Regency Hotel, Garden Grove, CA.

Bankruptcy expert Wanda Borges, esq., will talk about electronic credit applications during the panel discussions, while Alvin Moreno of Nestle will discuss the elements of a lean office that he’s brought into his company to help make his credit operations run more efficiently. Other panels and the return of CMA’s popular “Speed Networking” event will also take place at CreditScape.

The CreditScape Spring Summit, powered by United TranzActions, features one packed day of workshop training, expert practical and legal advice, and networking with other credit professionals, designed to give you insight on areas where you can make improvements in your company’s credit operations.

Many believe that having a credit policy is very restrictive, while others say it is not needed because the world is constantly changing and it is difficult to keep up the pace. Yet a third group touts its value in a changing world. From these samplings of answers and beliefs, we can say that credit policies need to be put in the proper perspective and place.

What Policies and Procedures Are and Are Not

Policies and procedures are not a straightjacket. And if they are to be restrictive, it should be with a compelling reason and cause. In fact, they should act as a seat belt that can be expanded or contracted depending on the situation and circumstances. They should not be used as a platform to penalize and punish. They are not meant to be rigid, capricious and inflexible. Though they convey permanency, they are not permanent. Policies and procedures are set to facilitate, not debilitate, the business process. They are set to empower, not to enslave. Policies and procedures are dynamic and they should serve the company as well as the customer. They should be reviewed periodically to ensure that they reflect up-to-date requirements and the real business climate and environment.

When we look at credit policies and procedures from a wider perspective, we can clearly see that they serve an important purpose and a vital role in the health of the organization. They act as strategic guides that point to the direction and path that need to be followed. They spell the tactics that need to be employed, on a daily basis, to ensure control and compliance.

Policies and procedures should be used as guidelines and a platform to facilitate the company’s operations. They create a map that every member of the business enterprise can use to ensure the smooth handling of the tactical and day-to-day operations, as well as to gain insight into the strategic intent of Company. Policies and procedures, if conveyed properly to the sales team and the customer, could help all understand the why, why things happen in a certain fashion. Educating all stakeholders on the Company’s policies and procedures will ensure not only excellence in performance but will result in a more satisfied customer.

In short, policies and procedures are a NEED. Companies need them to safeguard their financial stability and prosperity.

The Five Cs

When a company constructs its policies and procedures, they need to build them on the Five C’s:

1. Compliance
2. Communication
3. Coaching
4. Consistency
5. Cashflow

Compliance: We live in a highly-regulated environment. And companies, both domestic and international, act and interact in this environment. Thus, they need to be aware and compliant with the demands and requirements that the environment presents. No company can afford to be found lacking and non-compliant. International Credit Managers perform strict due diligence on country and client. They ask their prospects and clients to fill out a credit application. They verify, inquire, investigate, obtain credit reports, perform non-financial and financial analysis, employ the AW Matrix, and they cross-check every C of credit before they make a credit-decision. In fact, credit decision makers must be well informed and up-to-date on every development in the environment.

Communication: Credit policies and procedures are a communication tool. Thus, they need to be clear, concise, relevant, and timely. They communicate the vision and mission of the organization and its departments. They are used to communicate with internal and external customers. They communicate goals, expectations, and KPIs. They explain processes and procedures step-by-step. In fact, credit decision makers should use their policies as a vehicle to communicate and build understanding, collaboration, and buy-ins.

Coaching: Because of the detailed nature of policies and procedures, credit professionals should use them as a coaching and training vehicle. They should use them as a tool for coaching and developing employees and clients. When used for coaching, they become easy to adopt and implement. Policies and procedures should be used as a vital component of training manuals and new hire orientation training. In fact, a credit policy and procedure manual should be a book that codifies the existing body of functional, technical, and experiential knowledge to preserve it and later transmit it when needed.

Consistency: A Credit policy, when shared with all stakeholders, pursued zealously, and followed closely should result in consistency and stability. A credit policy spells the path and the steps to be taken as well as provide the guides for well-informed decisions and common sense, intuitive decisions. When all follow the policy with common sense empowerment, then consistency will reign and goodwill will expand.

Cashflow: As the title of this article conveys, policies should lead to profit and expansion of profit. When a company follows its policy, and ensures compliance, it will protect itself from lawsuits and penalties. When a company follows its policy, and ensures that its communication is clear, concise, relevant and timely, then it can save time, efforts, and money in dealing with complaints and internal and external customer issues. When a company follows its policy, and uses it as a coaching tool, then it can save time and money in looking for new personnel and even new clients. Coaching helps training and retaining of employees and clients. When a company follows its policy, and ensures consistency, then it can save enormous amount of resources on reworks, defects, low morale, employee turn-over and loss of customers. And when a company follows its policy, and ensures it cashflow, it has indeed not only protected its profit, but actually realized it when cash was collected and deposited.

I know of a company that has a policy of reviewing its key accounts daily. Every member of the credit department as well as their sales team is daily involved in a debriefing on these key accounts. The consistent application of this policy helped the company reduce its bad debt account and expedite its collection results. Consistent application of policies and procedures PAYS!

In short, a credit policy is not a want or a desire, it is a need that can protect cashflow, realize profit, and create expansion.

Eddy A. Sumar is the President & Founder of ERS Consulting Services. He is a frequent contributor for CMA, and a longtime speaker and educator on international credit related issues. He spoke at a recent International Best Practices Forum meeting, the recording of which is available on demand. He can be reached at 909-481-9869 or ealberto@aol.com.

by Sam Fensterstock, AGA
“Cash is King,” and if you are not maximizing your cash flow, it can have serious repercussions on your operations and bottom line. Most companies, in particular SMBs, wait too long to aggressively go after their slow-paying accounts. It costs four times as much to bring on a new customer as it does to keep an existing one, so no one wants to lose a customer over collection tactics. However, once a customer on credit goes 90 to 120 days past due and is no longer ordering and paying down the old balance, it is going to become more and more difficult to collect these accounts with only internal resources. The effect of your customers owing your company money for too long can be significant.

HOW IMPORTANT IS CASH FLOW?

The difference between the beginning cash position and the ending cash position of a given period is called cash flow. If you take in more than you spend you have a positive cash flow, the reverse is a negative cash flow. Cash flow is one of the major indicators financial institutions use to evaluate financial health. Banks and financial institutions are not going to loan you money if they don’t think you can pay it back. Remember, when you borrow money for any purpose, you are going to pay it back with future cash flow. You can’t pay it back if you have a negative cash flow.

HOW CAN YOU DETERMINE IF YOUR CASH FLOW CAN BE IMPROVED?

Collecting your accounts receivable as quickly as possible is a major factor in having enough money to cover current operating needs and pay off your debt commitments. There are several credit and collection performance measures that can tell you whether you are collecting your accounts efficiently, or if you need some outside help to improve your cash flow. We will discuss two of the most popular ones:

Days Sales Outstanding (DSO)

DSO is a measure of the average time in days that receivables are outstanding. It can be used to compare your company to other organizations for identifying whether your company is converting receivables to cash efficiently. In most instances a DSO under 40 days is good assuming you are giving 30 day terms. A DSO from 34 to 38 indicates very good operating performance and a DSO over 45 indicates that you are not converting your receivables efficiently and that some outside help may be necessary. The formula for computing DSO is:

(Ending Total Receivables x Number of Days in Period)/(Credit Sales for Period Analyzed)

A sample calculation is:
Ending Receivables = 1,000,000
Credit Sales for Period = 750,000
Number of Days in Period = 31

DSO =(1,000,000 x 31)/(750,000) = 41.3 days

Collection Effectiveness Index (CEI)

This measure was developed by the Credit Research Foundation (CRF) and is thought to be a far better measure of collection effectiveness than DSO. It produces a percentage that measures the effectiveness of collection efforts over time. The maximum value is 100% and the closer you are to 100% the more effective you are. A CEI under 75% needs to be improved or your cash flow will eventually be negatively affected. The formula for computing CEI is:

Notice the difference in the results of the two calculations. The DSO is acceptable, but the CEI is not.
Realistically, whichever measure you use, it should be computed frequently (monthly if possible) and reviewed over time. If it’s trending downward, even if it is not yet unacceptable, you should consider bringing in outside help to stop the downward trend before your cash flow is seriously affected.

WHY USE A THIRD-PARTY COLLECTION AGENCY?

Any receivable not collected represents a loss and affects your bottom line. You have laid out money for goods produced or services rendered and not collected the money due your company. Your cost of sales has gone up, but your revenues haven’t. That’s a net loss and your bottom line has been reduced accordingly. For example, suppose your profit margin is 10%. In other words, on a $5,000 sale you make $500, or your cost of sales is $4,500. If you have to write off $50,000 of receivables in a year, you need an additional $450,000 in sales to make up for it. Sometimes not such an easy task.

There are at least three good reasons to use a collection agency to help collect past due accounts:

A collection agency will collect from accounts that you could not. Your past due accounts won’t talk to you but they will talk to an agency or the collection agency’s attorney. The agency knows that to collect they must make contact with the account and they won’t stop trying until they do. A good collection agency will make 10-15 attempts to reach your former customer in the first 30-45 days they have the file, typically about three times the number of attempts your internal staff will make. As their fee is based on what they collect and agency will be more persistent and assertive than your internal collectors are at this stage of the customer lifecycle. Just remember this, collection agencies don’t get paid unless they collect your money and collection agencies do not want to work for free.

Using an agency frees up the time and resources needed to manage your current active business. Collecting money is very time consuming. You need to send letters, emails, possibly make customer visits and make phone calls, lots of phone calls. This takes time away from the things you and your employees need to do to manage and run your business on a day to day basis.

A collection agency utilizes technology that you do not have. This makes them far more proficient at collecting money than their clients. They possess advanced tools that help them find and make contact with debtors. This technology is costly and unless you are in the collection business you won’t have it. Additionally, their personnel are professional debt collectors. That is what they do and they do it well.

CONCLUSION

According to Commercial Law League of America, the amount of money you are likely to collect from a past due account is directly correlated to the age of the account. Once the account is 90 days past due you will most likely collect only about 70% of the amount due, and after 6 months only about 50%, and the amount likely to be collected continues to go down rapidly from there.

If your customer has not paid you and they are more than 90 days past due, there are no new orders coming in the door and they are not responding to your request for payment you are probably not going to get paid on your own. For these types of accounts, it makes business sense to place them with a 3rd party collection agency now and at least get 30-40% of your money back. This will allow you to maximize your cash flow and minimize the negative effect on your bottom line.About AGA

For over 40 years, AGA has been the most respected commercial collection agency in the nation. We assist corporations with improving cash flow, while preserving a positive image with customers. We accomplish this by employing the best and brightest talent in the industry, with low turnover and unparalleled tenure.

As I travel around making visits at member companies, I am constantly amazed how many of the lobbies are shrines to the Salesperson of the Month or Regional or District Team of the Quarter, or some like group. Being in sales, I know how difficult it is to achieve and maintain some of these goals, so I certainly do not harbor any ill feelings for this recognition.

My question is, where are the pictures and accolades for those who open, investigate, monitor and routinely babysit the account so that the customer continues reordering and the sales team earns their plaques on the wall? Is management aware of the contribution you are making to this effort?

Do they know that information from CMA’s Group alerts prompted you to put the account on COD months before the BK, thus saving the company major dollars? Are they aware that knowledge picked up at a CMA Lien webinar or protection you gained by placing a lien through CMA’s lien services department showed you how to protect your rights and receive payment when others did not? Do they know that by analyzing credit reports, you were able to raise the credit limit and therefore assist the sales team in making their numbers?

It is not a violation of group confidentiality to inform senior management that their investment in CMA and the group has resulted in major savings or increased revenue. By informing them routinely how THEIR decision has benefitted the organization, you will have an easier sell at renewal time or when you wish to attend an educational event or possibly at your annual review. If you are not going to tell them, who will?

I look forward to seeing your picture prominently displayed as a valued member of the team.

Being a good credit professional has nothing to do with luck. A solid credit professional is one who has invested in him or herself by taking classes and/or receiving an NACM certification; attending industry credit groups; and networking. The key in all of the above activities is getting as much information as possible. An effective credit manager should always strive to learn everything they can about one’s industry and profession, networking with as many credit professionals as possible to understand industry best practices, trends and tactics they can use to make their department run more smoothly (this is another under-rated and often overlooked benefit I get out of attending Group meetings as well).

On April 12, credit professionals will have the opportunity to attend CMA’s Spring CreditScape in Garden Grove, California. The goal of CreditScape is to provide an opportunity for credit practitioners with all levels of experience and expertise to come together to determine ways to reduce costs and create efficiencies in their credit departments. Some of the topics for the conference include:

Credit practitioners from companies such as Nestle, CED, Reliance Steel and Cemex, among others, will be talking about how they’ve seen process improvements in their businesses, and how they realized those improvements. In addition to the sessions, there will be Speed Networking: Tools to help Create Efficiency and Reduce Costs with CMA’s sponsors and a networking event so you can get to know other credit professionals, along with workshop opportunities to keep you participating in the event as a participant, not just a bystander.

I strongly encourage you to attend this CMA event as a way to increase your knowledge base so that your methods of credit management aren’t as random as trying to find a four-leaf clover in a large field. Happy St. Patrick’s Day!

For personal finance, credit cards are clearly the preferred payment method for most every qualified consumer. However, in the B2B marketplace, many companies have either limited acceptance or even shied completely away from accepting credit cards due to high service fees and integration costs. Even with the relatively high cost of processing, credit cards do offer some advantages to your company that will help bring efficiency and shift risk to the credit card company. How can your company gain efficiency by accepting credit cards and what’s in it for you?

LOWER YOUR CREDIT CARD OVERALL COSTS: Credit and treasury managers must understand all the options available for price reduction and how to make sure that you are both minimizing risk and taking advantage of every available option.

RECOUP YOUR CREDIT CARD FEES THROUGH SURCHARGE AND CONVENIENCE FEES: The Network Surcharge Rules are loaded with twists and variables, so it is imperative to have qualified individuals to guide you through that minefield.

ELIMINATE CREDIT CARD FEES WITH A CREDIT CARD ALTERNATIVE: There is a viable alternative to credit cards which has proven its value time and again over the years. This alternative is one third the cost of a credit card and a much more secure transaction with no chargebacks.

As an exclusive NACM partner for over 20 years, United TranzActions has been successful in advising members on how to process credit cards more efficiently, how to save dollars, and how to maximize the value of their use of their credit card usage. UTA will be one of the featured companies attending the upcoming CreditScape Summit, powered by UTA, in Garden Grove, California on April 12, 2017. More information on the conference is available at www.CreditScapeConference.com. I’d love to speak with you at CreditScape and see how we might help you in the credit card arena. And if you are unable to make it, feel free to reach out to me anytime for any advice on your payment processing needs.

Michael Williams is VP NACM Relations at United TranzActions. He can be reached at 305-606-6703, or mwilliams@unitedtranzactions.com

How do you move people to action in order to increase efficiency? How do you get results from others without destroying relationships? These are burning questions in most organizations.

One thing is clear: the ability to influence people is not something you must be born with, but something you can learn.

Think about the best influencers in your life: clients, or people you’ve worked for, worked with, or even supervised. What made them great influencers? Was it their ability to ask questions and really listen to your answers? Did they paint a picture of the future that you found appealing and wanted to be part of? Were they able to convey their thoughts on a topic efficiently and directly and then invite your input as well?

Effectively using influence skills means learning some new behaviors – or, in some cases, refocusing behaviors your already use in order to be more efficient. Influence behaviors fall into three categories: push behaviors, pull behaviors, and push/pull behaviors.

Many people are well-versed in push behaviors, which have to do with stating your needs directly. Others are more comfortable with pull behaviors, with which you draw information out of the other party. Far fewer effectively use push/pull behaviors, which both increase commitment and move people toward action.

Most people have a default: a set of behaviors they use over and over because they work (or, often, because that’s all they know). The most effective influencer, though, is one who can pick and choose the best behavior for that moment, much as an artist decides which brush to use for each section of a painting. Using influence skills well, then, means being able to assess a situation in advance, think about the appropriate behaviors, try them, and pivot as necessary.

Planning for influence can’t be overlooked. While spur-of-the-moment opportunities to use influence skills do come up, far more often we know we’re heading into a meeting or making a phone call during which we want to influence the outcome. The investment in spending a few minutes thinking about what you want to get out of the situation, what you think the other party wants, and which of the influence behaviors you’ll use is well worth the effort. Does it take a little more time? Yes. Does it require you to change how you approach these situations? Probably. But the confidence that comes from having a plan – even if it changes mid-stream – can’t be overstated. Confident influencers are effective influencers.

Learning new behaviors often makes people anxious. But the payoff in developing influence skills is increased efficiency and better relationships, which will serve you now and in the future.

I will go into much greater detail about this during my interactive keynote presentation at the upcoming CreditScape Summit, April 12 in Garden Grove, CA.

Dan Goldes is a facilitator, trainer, and speaker based in San Francisco. He will speak on Influence Skills at CMA’s Spring CreditScape Summit on April 12. For more information about the event, visit www.CreditScapeConference.com

Stop us if you’ve heard this one before. Your boss comes to you and tells you that you need to cut costs in the credit department, or that one of your resources (i.e., employees) now needs to split their time between credit and something else not related to credit. You’re already short-handed in your department. What’s a credit professional to do?

We work in a “do more with less” world. Practitioners in the credit department are impacted more than most. Dedication to process improvement is the only way to achieve high-performance results in the face of diminishing resources.

At CMA, late last year we conducted a research study where we spoke with more than a quarter of CMA’s members who told us that their biggest concern in 2017 is related to doing more with less. Whether it’s cutting costs or maximizing their efficiency, or a combination of both, CMA members are always looking for ways to streamline their credit operations. As a response to those conversations, CMA has tailored its CreditScape event to help credit managers with all levels of experience and expertise to leverage the knowledge and experiences of practitioners who have implemented new efficiency-maximizing processes in their credit departments.

The 2017 CreditScape Spring Summit, powered by United TranzActions, will feature a full day workshop that includes a keynote address on persuading internal and external customers, training sessions, expert practical and legal advice, and networking with other credit professionals. The goal of CreditScape is to provide an opportunity for credit practitioners at all levels of experience and expertise to come together to solve problems and provide solutions for their real-world issues they face at work.

Over the next few days, several participants in the event will be guest blogging about the power of persuasion and areas in your credit operations where you could be more efficient.

We invite you to join our guest bloggers at the Spring CreditScape Summit, powered by UTA, April 12, 2017 at the Hyatt Regency Orange County (or view the website at www.creditscapeconference.com), and to read their blogs, as the information you’ll receive can help you save time and resources in the long run.

What areas of your credit department do you think you could use efficiency to cut costs that you the most interested in learning about? We welcome your feedback.

At CMA, we often hear stories about how credit group membership can save your company THOUSANDS of dollars by providing critical information that helps you avoid extending too much credit on high-risk accounts. Here’s a real example of how a multi-national company avoided a costly disruption when a long-standing critical supplier filed for bankruptcy.

CMA President and CEO Mike Mitchell

The member regularly attends credit group meetings, and at a recent meeting, he was surprised to learn that one of his company’s critical suppliers had recently filed for bankruptcy. He was surprised by the news because his company subscribes to various monitoring services that should have alerted him and his department to the bankruptcy filing. When he contacted his procurement department, he was further surprised to learn that the department responsible for the relationship with the supplier was not even aware of the bankruptcy filing. The member had sufficient time take the necessary steps to source the critical supplies from a different supplier so that production was not interrupted. Supply chain disruptions potentially can cause more damage to a company’s business model and reputation than the failure of customers to pay their bills, so this was a big deal.

Once the member had mitigated the risks of the potential supply chain disruption for his company, he contacted his supervisor, the Director of Corporate Credit, and let him know that the critical piece of information came from a discussion at a CMA credit group meeting. He gave CMA credit for providing the information that potentially saved his company millions of dollars in lost production time and goods.

We hear these stories all the time at credit group meetings. The real value of regular participation in credit groups is the money and time you save in getting the critical information you need in order to get out in front of situations that could cause significant losses to your company. The member whose story I highlighted above feels confident that the time and money his company spends to have him participate in credit groups is well worth the investment.

CMA has created an opportunity for top credit executives among different vertical markets to get together to learn from the successes (and failures) of other top credit executives at the CMA Credit Executive Symposium. This unique event allows senior-level credit executives to gather for a full day roundtable facilitated by 30-year credit veteran Robert Shultz. At the event, you’ll discuss high-level business issues and trends with your peers in many industries, compare best practices, and get tips on valuable resources to help you improve your credit operations.

The agenda for the Credit Executive Symposium is highly personalized and built from input from all participants so the issues are timely and relevant to all attending. Attendees of the event will engage in round-table discussions, thought-provoking breakout sessions, and guest presenters.

The event takes place on April 11, in Garden Grove, CA, the day before the 2017 Spring CreditScape Summit.

Our facilitator, Bob Shultz, is managing partner at Cutting Edge Business Resources & Solutions (CEBRS). Bob will incorporate trending issues with topic requests from attendees to challenge the group in an intimate, dynamic think-tank environment that is heavy on interaction, low on PowerPoints. You will explore questions that matter most in your career and to your organization in roundtable discussions with seasoned credit peers from many industries. For more information about the event, contact Mike Mitchell at mmitchell@emailcma.org or download the event flyer here.

If your Industry Credit Group is anything like some of our other groups, your participation has never been more vital to your company.

We are seeing the super stores (Costco, Home Depot, Walmart, etc.) taking a very substantial market share from the small- to medium-sized businesses. Amazon and other internet-based sites are making it easy for anyone to order any product regardless of where they are located. The days of neighborhood stores and reliable customer service are being replaced by free shipping and easy return policies.

The best way to stay ahead of this trend to protect your company is by participating daily in your industry credit group.

By posting alerts, you not only send out a warning, but it might trigger another member to look at their aging and see the same customer slowing and now a pattern develops. This is exactly the scenario that saved members of the Underwater Sports group from large losses when two major sporting goods companies filed BK in 2016. Post your alert at the first sign of slowness.

By requesting and responding to RFIs, you get a complete picture of the customer you are dealing with. Can the customer handle the total outstanding balance on the report? How is he paying his other suppliers?

The third advantage you have is the monthly meeting/ conference call. There is no other profession where companies share trade and Best Practices with their competitors for their mutual well-being. The meeting is about 90 minutes including lunch, the calls are usually half that time. There is no task that can be performed in that time span that could have a greater financial effect on your company.

There are some extraordinary people in CMA’s groups that know that if they pick up one piece of information at a meeting, on the call or through an alert/RFI, it is time well spent.

The date or call in number is located on your group home page on www.anscers.com. Plan on participating at your next meeting and throughout the year.

Now that the holidays are over, Credit Management Association is back with full steam ahead into projects that can help your company manage risk.

Here are a few of the projects we’re working on that you should be aware of:

– CMA recently announced our CreditScape Spring Summit, which will focus on process improvements in the credit department and cutting costs. The one-day event takes place April 12 in Garden Grove, CA. More info: www.creditscapeconference.com

– Future dates have been set for CMA’s new International Credit Best Practices Forum. For U.S. companies that sell abroad, this group can help you navigate some of the hurdles you might experience when selling overseas. More info is here.

– With all of the bankruptcies in the news last year from longtime strong companies, when is the last time you evaluated your credit information sources? CMA has a great resource who handles reports from all of the major bureaus and can get you the best solution for your company, not just the best solution from one bureau if you went direct. Learn more here.

– Several new advanced lien law webinars have been announced. If your company does construction-related business in Texas, California or Nevada, you should attend these sessions, which can be found on our education calendar. Details: http://www.creditmanagementassociation.org/events

Are you getting CMA’s updates, including news and updates from around the credit and collections profession? If not, subscribe to our newsletter here: http://conta.cc/1tA5pOE
If there are any other services you need to help your credit operations run smoother, we’d love to talk to you about ways we can help. You can reach us at 818-972-5300 or at www.creditmanagementassociation.org.

With Valentine’s Day coming up, I can’t help but think of how we teach our children the concept that “sharing is caring” as they are growing up. We hope over time this lesson fosters acts of generosity and kindness, and it turns our kids into quality adults. In our profession, sharing information is crucial to our success. Attending industry credit group meetings gives us that bit of real-time information that often we cannot get from a credit reporting service or the internet.

There is nothing like being able to speak with another credit professional in your industry to find out about a mutual customer. Of course, there are guidelines which we need to follow when discussing customers (past activity only).

The group my company belongs to has an attorney present during all discussions and social activities as a precaution. In addition to obtaining customer information, Industry Credit Groups encourage networking, which is an important aspect of growing in a profession. By talking to others, we find out more about our particular industry, educational opportunities and ways in which we can expand our own knowledge base and ultimately better help our companies make sound credit decisions.

If you are not already a member of a Credit Group, I strongly encourage you to contact CMA to find out about an industry credit group that would be appropriate for your company. If you are a member of an Industry Credit Group, fully participate and help it to grow. Look out for other companies that would benefit from being a member of your group. There is a real strength to an industry group that has high participation, plenty of members and solid leadership.

And while we’re in the giving spirit, I encourage you to nominate individuals who you believe are moving the credit function forward with one of the honors and awards categories that CMA will be recognizing at its Annual Meeting in April. It’s really easy to nominate someone, and it’s a great way to show your appreciation for a fellow credit professional who constantly leads positive discussions at your Group meetings or consistently helps other credit managers. CMA is an association made up of an amazing group of people like you who are dedicated to helping the other credit professionals in our areas.

CMA is proud to announce a new series of three webinars that will focus on tips and tricks you can use in your business to improve your collections results. The webinars, which are sponsored by CMA’s collections partner AG Adjustments will feature practical advice from a few of CMA’s most popular speakers: Bart Frankel, Dave Osburn and Greg Powelson.

Dates (and session descriptions) can be accessed under the links below:

Keynote speaker Dan Goldes will present “The Influence Edge: Increasing Efficiency with Influence Skills” in an interactive keynote workshop at the upcoming CreditScape Spring Summit, April 12, 2017 at the Hyatt Regency Hotel, Garden Grove, CA. The keynote discussion will fit in well with the event’s theme of how to create efficiency and reduce costs in the credit department.

The CreditScape Spring Summit, powered by United TranzActions, features one packed day of workshop training, expert practical and legal advice, and networking with other credit professionals, designed to give you insight on areas where you can make improvements in your company’s credit operations.

More information about the event, including a complete schedule, will be available soon.

The inaugural international credit best practices forum, which took place in January, was an overwhelming success amongst CMA members, as dozens listened in on the conversation led by international trade expert Gary Mendell of Meridian Finance. Based on the success of the meeting, CMA has scheduled the subsequent monthly meetings, which are listed below. Each meeting will address a to-be-determined different international topic, with a 20-to-30 minute discussion led by a thought leader, a question-and-answer session and open forum.

The January CMA Member of the Month is a good reminder of how a Group dynamic (and the information exchanged in a Group) can be so different from month to month, and why it is important to try to attend as many Group meetings as you can.

Regina Howe of State Restaurant Equipment is a 27-year Credit industry veteran who has participated in several industry credit groups throughout her career. She’s used CMA’s collection services (when she worked in the construction industry) and has recommended CMA’s services to other companies because of the success that she had with collections, information, prelims and liens.

A new member of the Food Group in Nevada, she came to a Group meeting in October (which provided some good conversation but not a lot of actionable items she could bring back to her company), and then again in December. “In December, I was very impressed with the increased number of members in attendance, the information shared, and the conversations that we shared besides past due info. I do realize that membership, attendance and participation are very important to the success of the group, and I am very interested in participating regularly, seeing what I can bring to the group as well take away from the meetings,” she said.

We appreciate her positive attitude and enthusiasm towards making her company better, the Group better, and using her membership to its fullest capabilities by participating in CMA.

During the holidays, CMA staff called and emailed most of our members to help us determine their goals and objectives for 2017, and what they thought their biggest obstacles would be. Thanks to all of our members who took the time to speak with CMA staff to share those goals, as we learned a great deal from the process, to help us shape what we’re doing to help our members. Many of you told us that (not surprisingly) that you want to reduce DSO, keep your A/R balances current, reduce late payments and bad debt write-offs, and keep customers paying on terms. Obstacles cited were customers requesting extended payment terms, reduced staffs, and bankruptcies. We also heard throughout that many of you need to overcome these obstacles and achieve your goals more efficiently and for less cost.

The upcoming CreditScape Spring Summit, which takes place in April, speaks to your concerns, as it will feature presentations and discussions that focus on helping you streamline operations and create efficiencies that will reduce the cost of doing business.

Kicking off the Summit is Dan Goldes’ presentation, “The Influence Edge: How to Get What You Want.” Why are influence skills important for credit managers? Credit roles are by their nature cross-functional – internally, you work for a senior finance executive, but you work with sales, order entry, billing, customer service, legal, shipping, and maybe even procurement. Goldes says that, “with the horizontal structure of today’s progressive organizations, it is increasingly important to ask for and receive the support you need to accomplish your goals. The most effective way to do this is through the strategic use of influence skills.”

Creating efficiencies that will reduce costs will require change, and change requires buy in. You will likely have to get approval from senior management to implement those changes (and the costs associated with them), and you will have to convince staff to adopt those changes. Both tasks require influence skills – without them, process improvements may not be successful, and indeed may not happen at all. When you attend CreditScape and learn about process improvements and tools that can create efficiencies and cost savings, we want you to feel empowered to take that knowledge back to your office and get things done. Dan says, “By using influence skills strategically, others will be more willing to help move organizational processes along without resistance.”

Additional programming at CreditScape will include a panel discussion from real-world credit practitioners explaining areas in their businesses where they’ve achieved process improvement, CMA’s version of “Speed Networking,” and other interactive events geared towards helping members create efficiencies and reduce costs in their credit operations.

At CMA, we are dedicated to helping develop educational programs that speak directly to your real-world credit needs and concerns. I encourage you to reach out to my team at CMA (or respond to this blog) if there are other topics that you think could help your business. I really hope to see you at CreditScape in April.

Over the years, we have sat in on numerous Industry Credit Group meetings, each with a unique membership structure, and almost all have the same challenges. Recently, during one of the meetings I attended, the members communicated that they were having a harder time collecting their money since their customers recently introduced a new “payment portal” for them to submit their invoices for payment.

For many credit & collection professionals, payment portals are nothing new, but for some these portals can be confusing. Here are just a few problems that were identified:

invoices weren’t compatible with customer portal

invoices are being skipped

capacity issues, as some portals cannot handle large volumes of invoices

invoice status are not always up to date

fees are being charged to process invoices

there is nobody to speak to when you can to follow up on an invoice that was short paid or skipped

Many credit professionals do realize that there are benefits to both sides when we leverage technology to expedite things. However, they also know there must be good communication and reasonable expectations on both sides for these programs to work.

This is just one example of how belong to an Industry Credit Group can help you navigate these various cash flow challenges. During the meeting, Group members shared their experiences and have given examples of how they have effectively navigated these payment channels to get paid.

Does your company belong to an Industry Credit Group? If you don’t, please give us a call to see if there is one that will help your company get paid faster.

This is a common-sense approach to the problem of determining whether a customer is about to become a collection problem. Companies that have a cash flow problem must choose which vendors they will continue to satisfy and which vendors they will not. If a company has insufficient cash on hand to pay all of their vendors on a timely basis, some of their vendors are not going to get paid on time. This can be a one-time problem and things could get back to normal fairly soon, or it can be an endemic problem and if you don’t act promptly it may cost you.

When you first spot a problem, you are not going to know whether it’s a short-term thing or the customer is in financial difficulty. It behooves you to make a determination and act as quickly as possible. Some of the signs to look for are discussed below. Essentially, they represent behavioral changes in the account. The chances are that if the account is having financial problems more than one of them will be evident, but the occurrence of only one may still signify a real problem. In any event, once you make your determination, the quicker you turn the account over for collection, the more likely you are to realize a significant cash return. Here are the things to look for:

The Account is Over 90 Days Past Due

The customer has been a solid citizen and almost always paid on a timely basis. Now they are 90 days past due, and it seems they are struggling to not go to 120. They answer your calls, but promises to accelerate their payments and clean up the past due balance are not met. They may also be evidencing some of the behavior discussed below. The chances are you have a problem and turning them over for collection may save you some money and in many instances, save you a customer.

The Account is Not Returning Your Calls

This is a sure sign of a problem. They are past due and ducking you. If they won’t talk to you after repeated attempts to reach them, your collection agency may be your only solution. Collection agencies have trained recovery professionals that focus on working with these types of accounts and experience this problem as a normal course of their daily activity. They will get your customer to the table because it’s what they do for a living.

The Account Has Started Purchasing Erratically

Over time, the customer has always bought, even if it’s seasonal, a reasonably predictable amount of product. Your salesperson on the account can’t understand what’s going on. There are several possible reasons for erratic purchasing. It is possible that the demand for your product(s) has become highly variable and the customer is purchasing accordingly, or your customer is having financial trouble and is having difficulty staying current. If other customers are still purchasing the same products on a consistent basis than the chance that there is a demand problem is small. So, a financial problem may be the reason. This is something that needs to be checked out before it costs you money.

The Account Has Stopped Buying

If the account has stopped buying and owes you money, even if it’s not past due, you need to be on the alert. For whatever reason, if the account no longer needs you, they don’t have a reason to be prompt. If they go 90 days past due, you are probably going to need outside help to collect your money.

The Account Changes Bank Accounts Too Frequently

Good banking relations are vital to a company’s health. If your account is suddenly paying you from a different bank it may not signify a problem, but if they pay you from a different bank every time they send you a check, something’s wrong. This needs to be checked out. An updated credit check is called for, and if it doesn’t come out clean, you need to pay extra attention to the account because, if they are not overdue yet, the chances are great that they soon may be.

You Receive Negative Trade Information on an Account

As of now, the account is not past due, but you receive some negative trade information on the account at a recent credit group meeting or from a credit report. This needs to be checked carefully. When an account gets into trouble, they start allocating their available cash. The more important vendors may not see a problem, but the secondary vendors find the account is falling behind. For example, if the account is a supermarket, to be in the soda business they need Coke and Pepsi. The alternative soda brands will see a problem, but Coke and Pepsi will not until the company is ready to go belly-up.

The Account Has Several Unresolved Disputes

There are always disputes with customers. They received the wrong items, or the items were received damaged, or they were entitled to a discount are some of the reasons an account will not pay an invoice in-full. However, these types of disputes are easily settled if both parties are willing to compromise. But when an account refuses to settle and the dispute grows old, and additionally more invoices are disputed and they too age, you have a problem and it has nothing to do with the disputes. The account is holding on to cash and the disputes are a way of justifying their non-payment.Final Thoughts

We recommend having a strategy in place to determine when to pull the trigger and place a customer with your collection partner. The warning signs listed above are usually evident during your internal collection efforts and the sooner you recognize them the better. We recommend being proactive with your internal efforts as soon as your customer is past due. If the customer is more than 90 days past due, you obviously have a problem and the account should be turned over for collection to maximize your cash flow.

But even if your customer is not 90 days past due, you may be about to have a problem. When an account evidences any of the behavior discussed above you need to get on their case sooner rather than later. Prompt action will save you money. If the account is behaving erratically you should turn them over as soon as they trigger the 90 days past due signal because in all probability things are not going to get better, only worse.Sam Fensterstock is Senior Vice President, Business Development, for AGA, a leading commercial collection agency based in Melville, NY. He can be reached at (631) 425-8800 or samf@agaltd.com.

If one of your responsibilities is to vet your company’s vendors, CMA recommends that you participate in the upcoming Supplier Risk Credit Group on January 25.

The January meeting of this group will feature special guest speaker Ken Bonitz. Bonitz is the Supply Management Solutions Advisor with Dun & Bradstreet, and over the past 15 years his primary focus has been with Fortune 500 companies; he’s had great success in all industry verticals.

Ken Bonitz is a 35-year supply-chain professional who has more than 20 years’ experience in high tech, developing supply chain solutions that focus on operational efficiencies, cost savings, profitability, risk and product support. He also has 15 years supply chain consulting experience, helping customers identify supply chain financial risk, operational risk, country risk, leverage opportunities and ERP/MDM improvements.

The meeting will take place at the CMA Glendale offices, or you may participate via teleconference.

The CMA Nominating Committee is now accepting nominations and applications for service on the 2017-2018 Board of Directors. If you would like to nominate a candidate for service, or you are interested in applying for a Director position directly, please complete a Candidate Nomination or Application form and return it to CMA by February 1, 2017.

Every year, CMA member volunteers help the association promote the credit profession, providing new ways to help companies make better business decisions. In order to recognize these individuals, the Honors and Awards Committee of Credit Management Association is now accepting nominations for the following awards:

CMA Credit Executive of the Year

CMA Member Company of the Year

CMA Instructor/Educator of the Year

CBA Designation of Excellence

CMA Mentor of the Year

CBF Designation of Excellence

CMA Student of the Year

CCE Designation of Excellence

CMA Member of the Year

This is an opportunity to recognize those credit professionals who have demonstrated outstanding leadership, exemplary commitment to the Credit Profession, and who have inspired or have worked to promote the advancement of credit management. The recipient will be announced at CMA’s CreditScape Spring Summit on April 12, 2017 at the Hyatt Regency Hotel, Garden Grove, CA. Nominees will be judged on the basis of professional experience, education, leadership ability and participation in CMA groups, committees and activities.

To nominate an individual or company for the awards, please use the following link:

Credit Management Association (CMA) Adjustments exists to help serve the creditors in the bankruptcy process by ethically handling assets and distributions in a cost-effective manner. As many businesses know, once a company files bankruptcy, the process can be so costly that the creditors lose out. As CMA Adjustments prides itself on being a full-service solution to companies looking to maximize their assets for their creditors in an alternative to bankruptcy, it has added real estate to its capabilities.

Once a company is out of business, the rules for payments, collections and distributions all transform and often require a third party to handle assets to ensure fairness to creditors. Often these third parties are attorneys or financial analysts whose services cost an enormous amount due to the expertise required. At CMA, we have handled all kinds of commercial assets for more than 130 years, and we have been cognizant that many times, recovery will come from the sale of real estate. We believe that the creditors will benefit by adding these assets to the liquidation processes.

Whether the funds come from collecting rents, managing properties or liquidating buildings, CMA manages the funds of insolvent estates with the creditors in mind. CMA is also available as a resource for companies to ask questions about any part of this process. For example, many creditor managers run property records as part of the credit application and have questions about real estate’s impact on the creditors’ right to recovery. With this new expertise, CMA has expanded its ability to help companies drill down on any asset that affects their recovery.

I’d love to talk to you in more detail about this program if you have any questions. Please feel free to call me at 818-972-5300 or email me at molly@cmaadjustments.com.

About CMA Adjustments

Frequently, a company suffering from the effects of diminished cash flow seeks relief from its debts through a bankruptcy proceeding. CMA Adjustments offers effective alternatives to bankruptcy. CMA’s fully developed and tested programs reorganize debt and rehabilitate insolvent companies at a fraction of the costs and none of notoriety that bankruptcy carries.

Through CMA’s out-of-court workouts management can work informally with creditors to reorganize debt or position a company for merger, acquisition or new investment. If liquidation is appropriate, CMA has extensive experience as assignee under an assignment for the benefit of creditors for most types of businesses.

Molly Froschauer is the General Manager of CMA Adjustments. She received her J.D. cum laude from Pepperdine University and her Bachelors from Claremont McKenna College. Before joining CMA, her practice was centered around bankruptcy and other out-of-court debt issues. She’s a member of the Bankruptcy Inn of Court, Los Angeles Bankruptcy Forum, and the Turnaround Management Association.

January is a natural time for reflection and goal setting. Professionally, this is the time when I like to take a look back at the previous year to see how I can improve on what we accomplished last year. From there, I begin to develop goals for myself and the department. I am always looking for ways in which to make the flow of work go more smoothly, payments especially at year end to be made on time, etc… I find that communication and organization are two of the most important keys to success.

Nothing can replace the personal touch when it comes to working with high-risk and key customers, one of my goals each year involves developing a list of customers to visit. Normally the list has no more than 10 – 15 names on it to keep the focus on those customers which can materially impact my company. Some of these customers are within driving distance, which minimizes the expense. Some I will have to fly to, but I try to combine it with a conference/seminar/meeting in order to get the most out of the trip. Making that personal contact with the customer can open up the lines of communication in many ways. When I am visiting a customer, I try to meet as many key personnel as possible from the CFO and/or controller to the Purchasing Manager. I always represent myself as yet another point of contact/resource for our customers. Years ago, I had a customer call to ask me a freight question involving a delivery. Normally I don’t handle this type of question, but I took down the information and rather than transfer the customer around the company I found out who could answer the question and put the two parties in touch. The personal touch is invaluable.

I also look for ways to better streamline our credit operations, making sure that our processes are as efficient as possible with the technology that’s available, and that we’re using the correct reporting resources to meet our needs and provide data to make effective credit decisions. When’s the last time you evaluated your credit reporting solutions? If it’s been more than a year, I suggest you do it again soon.

As you head into the New Year take a moment to reflect about 2016 – the successes and the failures – and how you and your department can improve. You are not alone by any means. CMA provides the means for networking (industry groups, the annual meeting, etc.), information exchange (the type of credit reports you need and the information exchanged through RFIs, alerts and credit groups), collection of tough accounts (collection services), etc… Please reach out to the CMA staff for any assistance you may need to ensure that your company’s credit operations run as smoothly as possible in 2017 and going forward. Remember, CMA exists as a partner to help your credit department accomplish its goals. Don’t forget to include CMA in your success plans for 2017 and beyond.

This article assumes that the debtor is the owner of the real property where the services and/or materials were provided. Different issues may arise if the debtor is not the owner, but rather the general contractor with respect to the construction project. This article does not address such issues.

Nevada state law provides a fairly straightforward process for perfecting mechanic’s liens. Under Chapter 108 of the Nevada Revised Statutes (“NRS”), there are specific steps to follow. In its most simplified version, in Nevada a claimant must (1) record its notice of lien[1], (2) properly serve the notice of lien[2], and (3) foreclose on the mechanic’s lien through court action[3]. However, when a bankruptcy comes into play, there are some traps that may befall the unwary. Understanding how the perfection and foreclosure of a mechanic’s lien is altered by the Bankruptcy Code requires a basic understanding of both Nevada construction law and bankruptcy law. Certain provisions of the Bankruptcy Code modify some of the basic concepts generally understood to be true in the area of mechanic’s lien law.

Perfecting a Mechanic’s Lien Post-Petition:

What happens when a claimant has provided goods and/ or services for a construction project, but before the claimant has either been paid or perfected its mechanic’s lien, the owner of the project files for protection under the Bankruptcy Code? Typically, once a bankruptcy petition has been filed, the “automatic stay” under 11 U.S.C. § 362(a)(4)[4] prohibits “any act to create, perfect or enforce a lien against the property of the estate.” This would seem to be a straightforward prohibition against taking any action to file and perfect a mechanic’s lien covering pre-petition goods and/or services. An unwary claimant may then stop all efforts to perfect and enforce its mechanic’s lien once a bankruptcy has been filed, and then lose those lien rights as a result. However, Bankruptcy Code Section 362(b)(3) specifically carves out an exception for perfecting a mechanic’s lien post-petition. This section states that the automatic stay does not apply to “any act to perfect, or to maintain or continue the perfection of, an interest in property to the extent that the trustee’s rights and powers are subject to perfection under § 546(b) of [the Bankruptcy Code].[5]

Section 546(b)(1), in turn, limits the Trustee’s powers to avoid liens by providing that those powers are subject to any “generally applicable law” that would permit “perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection.” In other words, most bankruptcy courts agree that state mechanic’s lien statutes that allow a supplier of labor and materials to assert a lien relating back to the time such labor or materials were first provided fall within the scope of § 546(b)(1). Under Nevada law, a mechanic’s lien may relate back to a pre-petition date if that date is when the labor and materials were originally supplied[6]; therefore, the act of recording and perfecting a mechanic’s lien under such circumstances is not subject to the automatic stay. That being said, the claimant may still want to seek a comfort order from the bankruptcy court prior to taking such an action and is encouraged to file a proof of claim regarding its lien as well.

Impact of the Automatic Stay on Actions to Foreclose a Mechanic’s Lien:

Even if a mechanic’s lien is perfected, whether that perfection occurred pre-bankruptcy or post-bankruptcy, the automatic stay will impact a claimant’s ability to either initiate or continue a suit to foreclose on the mechanic’s lien. The Bankruptcy Appellate Panel for the Ninth Circuit Court of Appeals has specifically concluded that the commencement of a foreclosure suit by the claimant post-petition violates the automatic stay.[7] This creates a major problem in Nevada since the procedure to enforce a properly perfected mechanic’s lien is the commencement of a foreclosure lawsuit within six months from the date the lien is recorded. Of course, a claimant may always seek relief from the automatic stay to commence or continue an action to enforce its lien. However, as an alternative, the Bankruptcy Code allows a claimant to preserve its rights by taking the substitute action of giving notice of its right to enforce the mechanic’s lien. It is recommended that this notice be filed in the bankruptcy case within the same time frame the claimant would be required to commence its action to foreclose the mechanic’s lien under Nevada state law. In Nevada, that time frame is six months from the date the Mechanic’s Lien is originally recorded.[8]

The Notice Required by § 546(b)(2):

Unfortunately, although the Bankruptcy Code requires the claimant to file a notice in the bankruptcy court to preserve its state law lien rights, the Bankruptcy Code fails to provide specific guidance as to what constitutes the requisite notice. The notice requirements under § 546(b)(2) differ from jurisdiction to jurisdiction, and unfortunately, there are no reported cases in Nevada dealing with the sufficiency of the § 546(b)(2) notice. However, the Ninth Circuit has concluded that the filing of a secured Proof of Claim is not sufficient to satisfy the § 546(b)(2) notice to maintain the mechanic’s lien nor is the recording of the lien itself.[9] Something more must be done to maintain the perfection of the mechanic’s lien or it will expire within the statutory six month period.[10] The guiding principle seems to be that the notice should inform the court and debtor that the creditor would have commenced the foreclosure action had bankruptcy not intervened. Despite some courts holding that oral notice or out-of-court action evidencing an intent to assert and enforce a lien can be sufficient, most courts conclude that § 546(b)(2) requires that something in writing be filed in the bankruptcy case.[11] A claimant should, at a minimum, file a pleading in the bankruptcy case that expressly provides that (1) the claimant has a right to assert a mechanic’s lien under applicable state law; (2) it intends to assert and enforce such a lien; and (3) it is authorized to do so under Bankruptcy Code provisions. The filing of this notice should preserve the claimant’s lien rights through the duration of the bankruptcy case.

Tolling of the Foreclosure Deadline:

Assuming the claimant has taken all the proper steps to preserve the lien, a majority of courts, including the Ninth Circuit Court of Appeals, agree that § 108(c) of the Bankruptcy Code tolls the deadline for commencing a foreclosure action to enforce a mechanic’s lien.[12] A claimant who timely records a mechanic’s lien under Nevada law and files the required notice under § 546(b)(2) in lieu of commencing a foreclosure action, has at least 30 days after the termination of the automatic stay (which may occur upon dismissal of the case or abandonment or surrender of property) to commence or continue its foreclosure action.[13] It is important to note that § 108(c) of the Bankruptcy Code only operates to toll the time period for commencing or continuing a civil action to foreclose the mechanic’s lien, and cannot be used to extend the time period for filing the original lien or the § 546(b)(2) notice discussed above.

Conclusion:

Claimants are cautioned to seek counsel if they have provided labor and materials with respect to a construction project and the property owner files for bankruptcy protection. In order to assert, perfect and maintain their lien during the bankruptcy case and avoid traps for the unwary, careful attention should be paid to the requirements of Nevada’s mechanic’s lien statute and the Bankruptcy Code. Otherwise, claimants risk waiving their mechanic’s lien rights.

Tracy O’Steen is an attorney in Armstrong Teasdale’s Financial and Real Estate Services practice group. She counsels clients on bankruptcy matters, distressed loans, commercial loan transactions, receiverships, landlord tenant disputes and other related commercial litigation. Mr. O’Steen can be reached by phone at 702.678.5070 or by email to tosteen@armstrongteasdale.com.

James Patrick Shea is a partner in Armstrong Teasdale’s Financial and Real Estate Services practice group and the immediate past president of the American Bankruptcy Institute. He has more than 30 years of experience advising financial institutions, landlords, vendors and other creditors in business bankruptcy proceedings. Currently, he serves as Special Counsel to the Chapter 7 Trustee in the Fountainebleau mechanic’s lien litigation. Mr. Shea can be reached by phone at 702.678.5070 or by email to jshea@armstrongteasdale.com.

CMA is currently recruiting companies for its new Software as a Service (SaaS) Industry Credit Group. The group will be comprised of interconnected companies that provide cloud computing models in which a third-party provider hosts applications and make them available to customers via the internet, and have a common customer base.

The initial meeting will be a networking event on Feb. 2, 2017 in Livermore, CA. If you’re interested in attending the networking event, please RSVP by January 17, 2017 with Amber Jackson ((702) 636-4323, ajackson@emailcma.org) or Ann Westpy ((702) 903-2643, awestpy@emailcma.org ).

We live in a global economy where many of the trading lines that used to go from state to state now stretch from country to country. Our businesses sell to places in the world where the political climate is volatile and it is the credit professional’s job to protect their company’s A/R and ensure they get paid on the deals they accept.

More and more, I have credit professionals asking me how CMA can help them assess the risk involved in selling to different countries, where they can find information and reports about companies in their particular country, and which resources they can access to help sell abroad. In our ongoing effort to help members with mitigating risk, we recently surveyed our members for input on the best ways for CMA to help members sell internationally.

Based on the results of the survey, I am pleased to announce the formation of a new International Credit Best Practices Group, a monthly virtual meeting for credit professionals from different industries to exchange best practices in international credit sales. Each meeting will feature an expert in one of the many areas of international credit, including credit reporting, credit insurance and international business consulting. Each meeting will allow time for participants to share their own knowledge, and get advice from the rest of the group to help address their own specific issues.

If you manage international credit sales for your company, please join us for the FREE inaugural meeting of the International Credit Best Practices Group on January 23, 2017 from 10 am – 11 am PST. We will be joined by several experts, including Gary Mendell and Robina Peanh of Meridian Finance, and Eddy Sumar of ERS Consulting, who will share expertise about getting started in international business and where to find information about assessing country risk. The event will be held via web conference, and you can sign up on the anscers.com Education page.

The Group is an excellent place for companies who sell internationally (or plan to in the future) to hear from experts who will share best practices, tips and tricks to help companies minimize the risk associated with selling overseas. During the initial meeting, your input will help the group determine topics for upcoming meetings, allowing CMA to build a series of agendas for topics that will help your business.

We hope that this new Group will provide you with the knowledge and tools you need to help your company compete in the global marketplace. I look forward to participating with you early next year.

It’s calendar year end and for many of us it is fiscal year end. It is the time of year when we take one last look at 2016 before the year ends. The last-minute dash begins. Calling customers to ensure large/crucial payments arrive on time. Working with the sales team to finalize or confirm any new customer arrangements or existing customer deals that might impact the bottom line. Speaking with management to confirm what the year-end expectations are. Sending accounts who aren’t communicating anymore to a third-party collections agency for their assistance.

Here’s a friendly reminder to please reach out to the folks at CMA if you need assistance. If you need an extra credit report, a last-minute clearance from your industry credit group, help filing preliminary notices or liens, etc., CMA is there to help you get through this last-minute crunch.

As we reflect back on 2016, though there is a lot to do during this time of year, don’t forget to recognize those people around you who help you make it happen. CMA will soon be asking for nominations for several awards including the CBA, CBF and CCE Designation of Excellence, Member of the Year, Member Company of the Year, Mentor of the Year, Instructor of the Year and so on. When the call for nominations comes out, please consider nominating someone you work with, an associate you network with, or one of your personal credit mentors for a CMA award. These awards will be handed out at the CMA Annual Meeting this Spring. If you have any questions about the awards, how to nominate, etc., please reach out to me or the CMA staff.

Lastly, but most importantly, I wanted to thank you for your continued support of CMA through your membership, industry group participation, volunteering, and use of CMA’s services. Your contributions make a difference.

Best wishes to you and your family for a very Happy Holiday season! I’ll touch base in January.

Many credit professionals would agree that the credit management position is often overlooked and undervalued After thinking about the many areas that a credit manager is involved with on a daily basis, many would believe that a good credit manager can directly impact the company’s bottom line. This is why your company’s CFO should make a point to have regular meetings with the credit manager.

These are a few areas to help make this point:

Quote to Cash: A good credit manager will help create visibility and reports to identify potential forecasting problems.

Compliance: The credit manager often has unique information about the suitability of a prospective customer that may impact the bottom line of the company.

Contract process: An experienced credit manager can help identify Terms & Conditions language, verify true corporate structure of the customer and their related entities, and they can help create profitable financing options that are often overlooked especially with repeat customers.

Shipping: By partnering with the Shipping department, the credit manager can make sure the credit policy is effectively being followed, cash deposits have been collected, and change orders have been properly identified prior to shipping. Without the credit manager’s insight, possible serious disputes, invoicing problems, and audit issues may appear downstream that may impact cash flow or revenue recognition.

Receiving-returned merchandise issues may also over-inflate A/R if credits are not processed in a timely manner.

Collections: The credit manager has a major role in the rhythm of the Cash Cycle. They are the drummer in the band; they help manage A/R to Finance relationships; they manage collections, disputes, and workout agreements with customers on a daily basis; all while being customer-centric to make sure the customer is satisfied and will be a repeat customer.

Miscellaneous: a seasoned credit manager can help identify best practice resources and quality assurance issues in many areas since they are required to see the BIG picture of the company’s sales objectives.

As the person at your company in charge of assigning credit, do you regularly meet with the CFO? If so, are those meetings useful? We’d love to get your feedback. Thanks for reading!

All too often, our members tell us that they want to take advantage of all of CMA’s benefits but they say they do not have the budget to do so. For companies on a calendar fiscal year, here’s your opportunity to begin planning for those budget worthy benefits for 2017. Even if your next fiscal year extends well into 2017, it’s never too early to start your wish list.

If your company is one of the 600+ members that participate in one of CMA’s 51 Industry Credit Groups, then you know how valuable it can be to have unlimited access to anscers Credit Reports, RFIs, Credit Alerts, and the knowledge and experience of other credit professionals in your industry. In the past year, CMA group members have submitted more than 45,000 RFIs, warned other group members with more than 6,800 Credit Alerts (which included NSF and bankruptcy information), and shared countless stories about best practices in credit. Many credit group members have reported that they still find their credit groups and the shared trade payment experience the fastest and most economical way to conduct timely due diligence on prospective customers and effectively manage existing customer accounts. The unique combination of industry trade data, insider knowledge about common customers and industry best practices often recoups your dues many times over in helping group members minimize risk and grow revenue.

Before you budget, consider whether you are getting the best value possible for your credit information needs. Let CMA’s experts help you analyze your current credit reporting product mix – we might be able to save you money (and help you get better results) by suggesting a different report or mix of products that better meet your company’s risk assessment requirements while staying within budget. In addition to credit bureau contracts, CMA has several transactional credit report products priced to deliver maximum value at minimum cost. We have also seen usage for the NACM NTCR increase significantly over last year. Only CMA members have access to the millions of tradelines in the NACM National Trade Database (many of which are only available in this report), and at only $14.95 each, the NTCR reports are a great value for an initial credit check. CMA’s anscersX multi-bureau report combines proprietary scores and data elements from all three major credit bureaus (Dun & Bradstreet, Experian, Equifax) to give you a comprehensive look at the payment history of your customer or prospect ($69 per report). Be sure to budget for some anscersX reports to supplement your existing credit reports.

If you are a construction supplier, consider how using CMA’s Lien Filing Service can save you time and money. With more than 30 years of experience providing services ranging from preliminary notices to lien warning notices, mechanics liens, bond claims and stop notices, CMA has hundreds of clients across the United States who value the personalized, unlimited support from CMA’s caring and knowledgeable staff. You might be interested in CMA’s new Construction Credit Report, providing title data, public record data, active trade lines, credit analysis and scores, collection agency activity and links to state contractor information. The report, which is the only all-inclusive report of its type, runs $29.95 per report.

If you’re looking for professional development help for your staff, CMA is again offering NACM Certification Courses for the CBA (Credit Business Associate) and CBF (Credit Business Fellow) designations starting in January. These will only be offered once next year, unless there is sufficient participation for additional classes. If you plan to get certified in 2017 or early 2018, you’ll need to register for the Certification Courses now and budget accordingly ($899-$995 per course). Information for all professional development events can be found on CMA’s website and on anscers.com under the Education tab.

CMA will continue to offer its standard webinar program, which includes several series on topics such as collections, advanced lien law and credit reporting. Our webinars typically cost $49 for CMA members and $69 for non-members, but some may be free to CMA members, depending on the topic.

We hope this list is helpful as you consider your needs for 2017.

Are there other credit-related services that you’re looking for that we currently don’t offer? Feel free to reach out to me by responding to this blog. Thank you for reading, and we look forward to your increased participation with CMA in 2017!

Do you have to make tough credit decisions quickly? How would you like to have the power of over two billion trade credit experiences available to you from the three most reliable sources on the planet? What about having credit scores and valuable facts on a company’s history at your fingertips immediately when the credit request lands on your desk?

In today’s competitive environment, informed credit decisions must be made quickly to get product out the door. Your company expects credit to support Sales and drive revenue. At the same time, credit decisions must be within your company’s risk tolerance with a likelihood of prompt payment.

This was the thought behind CMA’s anscersX Multi-Bureau Trade Credit Report. anscersX provides all the above and more from Dun and Bradstreet, Experian and Equifax. You choose which bureaus you want to see. You pay only for what you get. The report is online and delivered to your workstation within seconds of ordering it.

anscersX provides all of the information you need to make most credit decisions. A Paydex Score from Dun and Bradstreet, Intelliscore from Experian and a Business Risk Score from Equifax, along with over two billion current trade lines, trends, details about the company and public records of suits, liens or judgments.

There is a side benefit to those of us in credit who must defend our decisions. Using powerful information such as the anscersX report will help justify any decision you make. If there are questions or push-back, you are locked and loaded to illustrate why you came to the conclusions you did.

Consider the anscersX report if any of the following are true:

Your monthly requirements do not justify a costly contract with one or more of the bureaus.

You are looking for a more efficient and cost effective way to order reports from multiple bureaus.

You have a contract with one of the major bureaus but want reports from additional sources.

You have a limit on the number of reports you can order from a bureau, anscersX can conserve usage.

A multi-bureau report will give additional insight into a higher risk prospect or customer.

The best thing you can do for yourself today is to go to anscers.com and check out anscersX. It is brought to you by Credit Management Association for the benefit of the credit management community.

Robert S. Shultz is a Partner at Quote to Cash Solutions (Q2C) LLC, and a frequent speaker at CMA-sponsored and other credit events.

Homeowners sometimes get blindsided when it turns out the GC they hired hasn’t paid his subs or materials suppliers. The lien waiver in your contract protects homeowners against this.

BY JIM CORY

If you live in Tampa and own a house, count your blessings that you never hired John Iacovino and Ike’s Roofing to replace your roof. If you had, you may have ended up like John Pfaff who paid Iacovino $8,800 to re-roof his home. The roof got replaced, only Iacovino, owner of Ike’s Roofing, never paid for the roofing materials he obtained on credit from Suncoast Roofing Supply. And because, after first sending a Notice to Owner, Suncoast Roofing Supply filed for a mechanic’s lien on the property, Pfaff is now obligated to pay for the $3,700 worth of materials the supplier furnished to do the job. According to the local sheriff’s office, Suncoast Roofing Supply is out about $150,000 and there are now 70 properties with liens on them, thanks to Iacovino, who has a history of drug and DUI arrests.

Secure the Receivable

What that lien could potentially mean for Pfaff is that Suncoast Roofing Supply can force the sale of his home at auction—foreclose on it—to satisfy the $3,700 it is owed.

More likely, however, is that when he goes to sell his property, or if he attempts to refinance it, the amount owed to Suncoast Roofing Supply will be paid from the proceeds of the transaction. A mechanics lien, in legalese, is designed to “secure the receivable.” Goods or services were rendered in good faith, and the lien, to ensure payment, becomes an encumbrance to the sale or transfer of the property.

The mechanics’ lien (standard usage is now ‘Mechanics Lien’) has been around since 1791 and was first conceived in modern form by Thomas Jefferson as a way to encourage construction on the nation’s capital. The concept owes its existence to the economics of the construction business. Mechanics liens were created as a unique legal remedy to protect contractors and those who supply them with labor (subcontractors), materials (supply yards), or specialized services, such as design (architects, etc.), from being stiffed. Wikipedia.com defines the mechanics lien as “a security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property.”

On one level, a mechanics lien entitles a contractor to come after a homeowner who refuses to pay. But it also entitles subcontractors or suppliers to come after that homeowner, and specifically the property, should the general contractor fail to pay either party as agreed. Under the law—every state has one and every state’s will differ—the improved property becomes collateral for payment. “A mechanic’s lien has nothing to do with mechanics in the usual sense,” notes legal website Nolo.com. “It’s a legal claim against property being improved, and it can be filed by anyone who provides materials or does work on the project and doesn’t get paid. The property itself becomes responsible for the debt, and the people who are owed money can force its sale at auction if something isn’t worked out.” That is, the lien holder (say Suncoast Roofing Supply, in the example above) could sue for foreclosure to satisfy the debt. Even if sale of the house at auction is not in the picture, “you cannot sell or refinance your home without dealing with the mechanics lien,” notes Colorado law firm Robinson & Henry, P.C.

“Thus when a creditor is owed a few thousand dollars he may record a Mechanics’ Lien against real property which may have a value of hundreds of thousands of dollars. You can see the leverage he has in collecting this debt! This is a great tool for mechanics, tradesmen, subcontractors, labor providers, and material providers. But it must be used properly or the Mechanics’ Lien may be found invalid and thus unenforceable.”

Not That Complicated

If you’re a contractor who’s been stiffed, or a supplier left holding the bag, the idea of taking legal action around the concept of a mechanics lien might sound complicated and expensive. Actually, it isn’t at all hard to file a mechanics lien. In Pennsylvania, for instance, you could simply go to anscers.com, fill out the online forms, submit them, and allow the lien service to file for you. The cost: $290, though the price goes to $850 for a New Jersey residential lien. Generally, counties charge a filing fee of less than $50, but the cost of preparing a lien, which would require a lien service or a lawyer, would be anywhere from $250 to $500.

The key is to move quickly and not let the situation drag on. You snooze, you lose. In New York, for instance, “you must file your mechanic’s lien within four months of the time that you last provided labor or materials to the project,” according to the website for New York Mechanic’s Lien. The time frame will differ in every state. So, similarly, is the requirement that preliminary notice—Notice of Intent to File a Lien—must be given, or, in some states, you as a subcontractor or supplier forfeit your right to file a lien. (Click here for a state-by-state breakdown of requirements for preliminary notice.) So, for example, in Florida, to collect for the materials it supplied to John Iacovino and Ike’s Roofing, Suncoast Roofing Supply would have to have served John Pfaff with a Notice to Owner (NTO)—preferably by registered, Global Express Guaranteed, or certified mail— “within 45 days from first furnishing services or materials.” That’s not a huge amount of time. Note that, according to the site: “Failure to
provide the notice within the statutorily mandated time frame is fatal to the lien claim in Florida.” The lien itself would need to be filed with 90 days of the date the materials were supplied and must be notarized to be valid.

In the state of California, mechanic’s liens are a constitutional right guaranteed to contractors by the California Constitution. This right has been implemented in detail by statutes enacted by the California State Legislature.

Lien Waivers

What Pfaff could have done to save himself the aggravation and expense of the mechanics lien filed by Suncoast Roofing Supply was to demand a waiver of liens, or a subcontractor lien waiver, in the contract he signed with Ike’s Roofing, if in fact he signed one. “With a lien waiver, when the project is successfully completed, both parties sign off and state that the contract obligations have been met, including the general contractor [in this case, Iacovino] making all necessary payments to materials suppliers, subcontractors or vendors,” advises the Angie’s List review site. “If the general contractor doesn’t agree to sign off on the subcontractor lien waiver, you can withhold payment until he or she has proved they’ve paid their suppliers or subcontractors.”

As for Pfaff, he can take some small amount of comfort in knowing that mechanics lien claims … very rarely result in a piece of property getting put up for auction and sold. As in, almost never. According to the source, and based on a survey of mechanics lien filings from 2011, 64 percent of lien claims were paid within three months, “without any additional legal or collection efforts whatsoever.” Which means that the mechanics lien functioned as Jefferson intended. So Pfaff will almost certainly keep his house. But unfortunately for him, he paid 50 percent more for that home’s roof than he ever thought he would have to.

ABOUT THE AUTHOR

Philadelphia-based freelance writer Jim Cory is a senior contributing editor to Professional Remodeler who specializes in covering the remodeling and home improvement industry. Reach him at coryjim@earthlink.net.

Happy November everyone! I am still trying to get used to the concept that it is Fall here in Southern California. Many days I feel like it is still just summer, extending out a few more weeks. Regardless, it’s at this time of year that I take time to think about life professionally and personally.

To do this task right, I often list out why I am thankful. I include on my list the educational opportunities that I did throughout the year which help me to do my job (this year, it was attending Credit Congress and Fall Creditscape), the personal and professional friendships I’ve been fortunate enough to have, the customers I enjoy working with, the great boss I work for and my family. I think it is extremely important to take a look at the positive.

In addition to taking a retrospective look, I try to thank those who help me. In my communications with our customers, I make sure to thank them for the opportunity to do business together. Internally, I thank those who provide me guidance, information, etc…

I am also thankful that we have CMA to help us in our professional lives. CMA is an amazing organization in all the services they offer credit professionals to help manage risk, such as getting advice on the best credit report for your organization and circumstance, filing your construction lien forms, safely facilitating the industry credit group you participate in, etc…

I encourage you to contact CMA for any questions you have regarding their services, or to try them out for the first time. They are great listeners too!

Best wishes to you for a very Happy Thanksgiving! Have a wonderful holiday, and thanks for reading.

On October 13, CMA held its first ever joint construction credit meeting, allowing CMA member companies from different vertical industries who sell to the construction industry to get together to talk about common job accounts. In addition, Chris Ng, Esq., spoke to the group on a series of construction law related topics, including the legalities related to job accounts. Amongst the activities at the event included a discussion of best and worst practices, which really hit home with many of the companies who participated. Thanks to all who attended.

CMA members are welcome at several upcoming networking opportunities in Northern California, Southern California, Las Vegas and Northern Nevada. These events will provide several great opportunities to network with credit and financial professionals from other industries in those geographical areas.

The dates and locations (as well as more information) can be found by clicking on the links below.

Every quarter the UCLA Anderson School of Management hosts the highly reputable (and influential) UCLA Anderson Forecast, an economic forecast for the U.S. and California. As an Advisory Board member of UCLA Extension’s Credit Analysis and Management Certificate Program, I was invited to attend the September 2016 Economic Outlook, a live presentation by the economists and economics professors who contribute to the UCLA Anderson Forecast. You can read more about the event on the official UCLA Anderson Forecast blog, but here are some highlights.

The theme this quarter was the impact of the economy on the Presidential Election. David Shulman, Senior Economist for UCLA Anderson Forecast, opened the session with a non-partisan breakdown of the major economic policies of both major party candidates for President. For me, it was nice to see policy differences in black and white without the political spin of the candidates and their campaigns. Bottom line, Shulman concluded that no matter who wins, Hillary Clinton’s approach (increased taxes and increased government spending) and Trump’s approach (massive tax cuts, changes in trade policy, less regulation, and yes, increased government spending) would BOTH increase the deficit. The reason – both plans assume a national GDP growth rate north of 2%, but Shulman argued that without improvement in productivity (maybe) and significant growth in innovation (unlikely), GDP will remain on a growth path of 2%.

Jerry Nickelsburg, Adjunct Professor of Economics at the Anderson Business School, gave his forecast for California. While still one of the fastest growing states in the U.S., growth of California’s $2.5 trillion economy is slowing because the state is close to reaching full employment. Declining manufacturing coupled with historically slow population growth will continue to restrain economic growth. Nickelsburg also warned that a trade war would have a greater negative impact on California than most states.

Nickelsburg also presented some interesting stats on small business. I didn’t realize that the proportion of small businesses (defined as enterprises with 10 or fewer employees) in Los Angeles County is much greater than the proportion in the U.S. and 26% of employment is L.A. County. To me, that means that small business is (and has been) a significant part of our local economy which CMA has not been able to reach. Perhaps CMA’s strategic partnership with the local SBA will provide more opportunities to reach those business owners who may not fully understand how to leverage business credit for the benefit of their businesses.

Shifting from local to global trade, I learned more about the controversy surrounding the broad-ranging free trade agreement known as the Trans-Pacific Partnership (TPP). Given that much of California’s economy is dependent upon international business flowing through the Ports of Los Angeles (L.A. is the #1 export district in the U.S.), Long Beach and San Francisco, why wouldn’t a free trade agreement that represents 40% of the global market be good for our local and national economy? The panel of experts argued that intense opposition to TPP is grounded in a retreat into protectionism, a general reaction to insecurity and uncertainty. Most interestingly, they claim that TPP is not as much about free trade as it is about anti-free trade because of all the exceptions in the agreement for goods like drugs, intellectual property, and dairy, just to name a few. I suppose that’s the fine print.

Economist William Yu concluded the morning session with a presentation of an economic model that puts a weight of 51% on each state’s real median household growth to predict the outcome of Presidential elections. A 10% weight is put on economic performance factors, GDP growth, Misery index, and state median income growth; demography, religion, and “other” factors such as candidates’ character, leadership, trustworthiness, campaign messages and strategies are weighted 13%, 3%, and 20% respectively. Since the election in 1972, the model has correctly predicted the outcome of 8 out of the last 11 Presidential elections. The model incorrectly predicted the elections of 1976 (Carter v. Ford), 2000 (Bush v. Gore), and 2012 (Obama v. Romney). Yu stated that the model currently gives Hillary Clinton a very slight edge over Donald Trump, but he was quick to say that it is within the margin of error and with 20% of the prediction weighted on factors like character, leadership, and trustworthiness, there is no predicting the public’s taste.

So why am I writing about this? There are several reasons. For one, it proves that economic data can be used to predict a lot of things, including the outcome of a presidential election (or how liberal your company might be in assigning trade credit). It also nicely demonstrated the whole “cash to cash” cycle that was discussed at length at CreditScape and in various blogs throughout the year. Finally, in the glut of credit-related content that we’ve been talking about all year here, I’m interested to gauge member interest in hearing more about topics like this. As we’re putting our education calendar together for 2017, I’d love to know what topics you’re interested in learning more about, including economic forecasts like this one. Feel free to leave comments below.

With the recent rise in bankruptcies, it is more important than ever before to have a handle on business to business (B2B) risk management. More and more fraudulent companies are emerging, as business lines are being blurred from start-up manufacturers operating from a garage, e-commerce “e-tailers” businesses that may or may not be legitimate. Because of this, it’s tough for credit managers and risk management professionals to tell the good companies from the “bad” ones.

So what’s a credit professional to do? Here are several activities you can do before you decide to extend B2B credit.

Validate their address. With Google maps, you can tell more about the location of a business than ever before. Does their address come up on Google maps? Does the satellite view (photo) show that they’re a residence or a business? Are they located in an area where it would be impossible to do business (i.e., a forest)? Answering these location questions ahead of time could alert you to red flags of fraud before you take them on as a client.

Make them fill out a credit application and check and confirm their credit references. When you call their list of references, are they companies who’ve done businesses with them recently? Are the phone numbers of their references valid? Are the numbers for all companies mobile phone numbers, leading to the conclusion that these are individual numbers not businesses? Are the references related to the potential client? If any of this data they provide sounds fishy, it could be another red flag.

Visit the customer’s website. There are many red flags that can be gained by visiting the site, including poor design, phone numbers not matching those given in the references, broken image links and other items that can cause you to question the validity of the business.

Utilize your Industry Credit Groups. Utilize the knowledge of your fellow industry credit managers by bringing up any suspicious companies during your Industry Credit Group meetings. As we see repeatedly in Credit Group meetings, fraudulent companies tend to go to multiple companies in a particular industry until they get what they need. Additionally, anscers RFIs and alerts can help you on an as-needed basis, and CMA members get unlimited access to these alerts and RFIs.

Use credit reports and decisioning data to help. CMA provides access to reports from the major reporting agencies and also offers the NACM National Trade Credit Report, which aggregates information submitted to all of the NACM affiliates that is not typically provided to the major credit reporting bureaus. And better yet, CMA members who contribute their A/R information receive 25 free NACM reports per year.

If you’re in the construction industry, consider using THE Construction Credit Report, providing access to public record data; title search (with live links to actual documents) on mechanics lien filing/release; notice of completion; notice of Lis Pendens (action/discharge); tax lien or judgment; active trade lines; credit analysis and score; collection agency and factoring company activities; and links to state Registrars Of Contractors. For more information on this unique report, click here.

If you consider doing these tasks before deciding to extend credit, you’ll help eliminate obvious fraud from occurring, protecting your company’s most valuable resource, its accounts receivable.

What processes does your company have in place to help protect from fraud? We’d love to get your input!

Abstract:
Credit cards are the fastest growing payment form. But the payment form is the most expensive for suppliers, leading many to rollout surcharge programs to offset the majority of the card costs. The Supreme Court’s recent decision will settle the constitutionality of state no‐surcharge laws.

For many suppliers, credit cards have not only become the preferred payment form for customers, but one of the most significant operating costs for suppliers. A mandate from the finance team is to make cards cost competitive with other payment forms. The way to offset rising costs is through a surcharge, passing the interchange fee (approximately 85% of the card charge) to the customer.

As part of a class action settlement with retailers in 2013, Visa and Mastercard amended the network rules to allow merchants, including suppliers, to surcharge. With the card networks allowing surcharging, suppliers considered as part of their nationwide surcharge rollout, whether 10 states that enacted nosurcharge laws limit the suppliers’ surcharge strategy.

The constitutionality of the state no‐surcharge laws has been vigorously challenged, with the litigation focused on whether the no‐surcharge laws violate the First Amendment and commercial speech on pricing, or instead whether they regulate economic conduct. No‐surcharge states allow merchants to provide discounts to cash and check payers, but not add a surcharge to credit cards. The Supreme Court has agreed to hear an appeal from the Second Circuit Court of Appeals that involves the constitutionality of no‐surcharge laws. The Supreme Court is expected to rule not later than June, 2017. How will the Supreme Court’s ruling affect suppliers’ right to surcharge? Are there steps suppliers should take during the pendency of the Supreme Court’s review, whether a surcharge has been rolled out or is about to be?

States No‐Surcharge Law Overlay

In 1976, the U.S. Congress enacted a federal law prohibiting surcharging. The credit card networks enacted contractual provisions in their merchant agreements barring surcharging. In 1983, the federal law barring surcharging expired. With the sunset of the federal law, the credit card networks lobbied state legislatures to enact no‐surcharge legislation to discourage retailers from surcharging consumers. Those 10 states that enacted no‐surcharge laws are: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

The uniform theme of the states enacting no‐surcharge laws is to protect consumers within their states from retailers adding a charge to cards, therefore acting as a form of tax on those consumers choosing cards to pay for their goods or services.

The no‐surcharge laws allow merchants to charge higher prices when a customer pays with a credit card, provided they disclose that the price difference is a cash discount and not a card surcharge. While surcharging is a more accurate disclosure the costs the merchant incurs with accepting cards rather than a cash discount, the card networks were concerned in lobbying for no‐surcharge legislation that surcharging may discourage card use.

Litigation Challenges to No‐Surcharge Laws

Of the ten states that have enacted no‐surcharge laws, four have had their laws challenged as unconstitutional. In 2013, the first litigation challenge was brought in New York, where five New York businesses sued New York, challenging the law on free speech grounds. The District Court found the nosurcharge law unconstitutional and overturned the law, but was reversed on appeal to the Second Circuit Court of Appeals. The Second Circuit determined that prices set by retailers was not “speech”, and therefore, the First Amendment was not relevant. The Second Circuit focused more on how surcharging was labelled, rather than the implications of the fee or its cost to merchants and consumers. Similar litigation challenges were brought in California and Texas. In March 2015, a federal court in California found its no‐surcharge law unconstitutional and unenforceable, which the state attorney general has appealed to the Ninth Circuit Court of Appeals. On the other hand, in Texas the no‐surcharge law was upheld, and that decision was affirmed by the Fifth Circuit Court of Appeals. By contrast, the Florida no‐surcharge law was upheld, but reversed on appeal by the 11th Circuit Court of Appeals. The card networks are not directly involved in the litigation challenges, but deferring to the states’ nosurcharge defense.

The Topic for the Supreme Court to Decide

The U.S. Supreme Court granted review of the Second Circuit Court of Appeals, where the court dismissed the free speech arguments and found the New York law only regulated economic conduct. The Supreme Court is the highest federal court and has the final ruling on constitutional law, which is at issue with the no‐surcharge laws.

The businesses challenging the state no‐surcharge laws contend the surcharge bar violates their free speech rights because it prevents them from freely disclosing their pricing alternatives. Merchants are
not allowed to say they charge card customers a higher price for cards, although a surcharge is a more accurate description of the costs of cards. An example: a product is priced at $1,000, plus $20 if a credit
card is used. This is a surcharge and impermissible under the no‐surcharge laws. But if the product is priced at $1,020, with a $20 discount for cash, is permissible.

More States Enacting No‐Surcharge Laws?

During the pendency of the Supreme Court’s consideration of the no‐surcharge laws, is there an effort by other states to adopt no‐surcharge laws? The answer is no. The chart below summarizes recent states’ efforts to consider enacting no‐surcharge laws. Not one state has adopted anti‐surcharge legislation since Visa and Mastercard settled their class action litigation and amended their rules to allow suppliers to surcharge customers in 2013.

The focus of the no‐surcharge litigation is retailers complaining about pricing disclosures with point of sale payments by consumers. A number of national retailers filed amicus briefs in support of the plaintiff retailers requesting the Supreme Court to rule on the issue. While the Circuit Court rulings have not expressly carved out suppliers and their business customers from the reach of no‐surcharge laws, the entire focus of the no‐surcharge litigation challenge relates to the facts of retailers and consumers.

What It Means to the Supplier and a Surcharge Rollout

What is a supplier’s surcharge strategy in light of the Supreme Court agreeing to weigh in on the nosurcharge laws? Whether the supplier has rolled out a nationwide surcharge program, or is in the process of doing so, the focus is on the customer base. If the supplier is selling to B2B customers, as opposed to selling directly to consumers, the supplier’s best practice is to condition card acceptance on the customer and cardholder agreeing to a card payment agreement form, that includes a contractual waiver and governing law provision. That provision provides that customers consent to waive the application of the surcharge prohibition when paying by credit card. That language may read:

All credit card commerce between [Applicant] and
[Vendor] shall be governed by and interpreted in
accordance with the laws of the State of [ ] without
regard to conflict of law provisions thereof, and all actions,
disputes, and proceedings arising from, relating to or in
connection with credit card commerce between [Applicant]
and [Vendor] shall be subject to the exclusive jurisdiction of
the federal district courts for [State] or, in the event the district
court lacks subject matter jurisdiction, the [State] state courts
located in [County]. For the avoidance of doubt, the
foregoing is intended to be a mandatory forum selection
clause divesting all other courts of jurisdiction to hear any
actions, disputes, and proceedings arising from, relating to
or in connection with credit card commerce between
[Applicant] and [Vendor].

The contractual surcharge waiver for B2B customers would be enforced during the pendency of the Supreme Court’s consideration of the no‐surcharge ruling, and after the ruling if the Supreme Court upholds the enforceability of the no‐surcharge laws.

The takeaway for the credit team is that a conclusive ruling on the constitutionality of the no‐surcharge laws will be forthcoming by Q2 of 2017. Having said that, suppliers selling in the B2B space may contract around the no‐surcharge laws through a card payment agreement with customers containing a contractual waiver and choice of law provision.

Scott Blakeley is a principal at Blakeley LLP, where he practices creditors’ rights and bankruptcy law. His email is seb@blakeleyllp.com

There’s an old proverb that there’s no substitute for experience. When dealing with an Industry Credit Group, as you may know, just because someone has experience doesn’t mean that they’re willing to share it for the overall good of the Group. However, if you’ve been to a Las Vegas Commercial Credit Group meeting over the past 8 years, you may know our October CMA Member of the Month, Dave Boudreau of Pacific Seafood of Las Vegas, an active participant in the group who is always willing to share his knowledge and best practices with them.

In addition to simply attending CMA Credit Group meetings for more than 50 years across several industries, Dave provides excellent contributions to the Group, especially on the topics of how to get paid, navigating internal customer channels and payment portals. He has always been one of the first members to show up for CMA meetings, he is always prepared with his reports and he always adds valuable comments to the Group discussions. He’s also a proud veteran of the U.S. Army.

An active CMA member since March 2008 with Pacific Seafood (and he’s been active with CMA with other companies before that), we commend Dave for participating, and we look forward to his continued support.

Members of the Month are nominated by CMA members, Group members, volunteers and CMA staff to highlight those members (or member companies) whose engagement with CMA has helped improve the overall credit profession for others.

For more information on how you can participate in any of the areas mentioned within this article, or to nominate any members for this honor, contact Diana Escobar at descobar@emailcma.org or 818-972-5300.

One of the benefits of group membership is being able to access the anscers databank anytime and not only receive information from members of your group, but information from members outside of your group. Many groups share common customers, and being able to pull up an anscers.com report and see a trade line or alert from someone in another group could be the difference in opening the account or not. After all, the information in anscers comes from past-due reports, meeting review reports, RFI’s, alerts and companies contributing their aging each month. More current information does not exist.

Now, expand the anscers databank to include 40 other NACM affiliates and their 10 million lines of information and you have the NACM National Trade Credit Report, NACM’s own report exclusively from industry credit groups and data contributors. The report is available at a reasonable price, and can act as the perfect companion to the major bureau reports. Get this with the pricing: each report costs $14.99, but if you contribute your company’s A/R to the databank, the price goes down to $9.99, and you get your first 25 reports for free. And this report IS ONLY AVAILABLE to members of NACM.

If you sell nationally or your customer has vendors outside of California, there could be multiple suppliers at other affiliates that have trade information on this account. If you sell strictly in California or Nevada, there could be suppliers in the other 48 states with trade experience with your customer. The information pipeline does not have to stop at the border anymore: for example, if a member of a Group in Dallas or Tampa reports them, you will be able to draw a report and make a more informed credit decision.

CMA recently unveiled this report to all members. Compare with your current provider and decide if the National Trade Credit Report has a place in your organization.

Let’s say that you have placed your former customer for collection and your agency demands, as well as the local attorney, demands have not been successful. Your agency along with your attorney believe that litigation is your only option in hopes of being paid, provided that the amount due falls above your suit parameters. Had the former customer filed for bankruptcy, you can forget about a lawsuit and write off the receivable. In this situation, if you want to have any chance of collecting, your agency along with your attorney will review all documentation supplied along with a review of their internal efforts and investigation and make a recommendation to you regarding the filing of a lawsuit in the debtor’s locale.

SOME THINGS TO CONSIDER BEFORE FILING

Upon agreeing to litigate, your agency will then provide your attorney all of the information they have on your claim including amount due, principal and interest; debtor’s contact and phone number; nature of your business; details of any dispute and creditor’s response with copies of memos and correspondence. Additionally, they will provide the attorney with any documentation they have including: credit agreement; contracts, leases, personal guarantees, promissory notes, and NSF checks; purchase orders, delivery receipts, invoices, and statements of account; etc. The attorney will use this information during the legal demand process to try to bring the debtor to the table as well as use to substantiate their pleadings if suit is filed.

If the attorney has exhausted all their demands with no positive result, the next step is to consider a lawsuit. Before bringing a lawsuit, you want to be very sure that you have a good chance of winning. It is going to cost you some upfront money to file a lawsuit, and it would be silly to spend it if the debtor is out of business and you have no personal guarantee or if it is a highly contested debt and debtor has a good chance of successfully defending it. If you are going to file a lawsuit, you need to determine whether any of the following debtor defenses are possible:

• Could the debtor claim a prior payment?
• Is the amount due an offset?
• Does the debtor have a basis for a counterclaim?
• Is the debtor disputing the balance and has documentation to back it up?
• Is payment barred by the statute of limitations?
• Were the goods and/or services provided deemed inferior by the debtor?

If any of these defenses, and there are more, is possible then you may want to think twice before filing a lawsuit, because if you have to go to court the suit may become expensive, and there is a chance you might lose, thereby increasing your cost with no reward. Also remember, having a personal guarantee always helps. Furthermore, if a defense is expected, can you supply a witness at trial? Keep in mind the expense of travel as well as time your witness may need to be deposed or attend and testify at trial.

Many times a lawsuit will bring your debtor to the table to negotiate a payout or settlement. Also, keep in mind that at any time during the process, the debtor can file bankruptcy, which will immediately halt any legal proceedings or they can simply go out of business.

COURT COSTS AND FEES

Your agency will provide you with the attorney’s contingent fee requirement as well as any non-contingent fee requirement.

Court Costs

Filing a lawsuit costs money. Included in the suit costs will be:

• The cost of filing a summons and complaint

• The cost of serving the debtor

• Costs for various required attorney actions during the course of the lawsuit.

The attorney will require, in advance, their estimated costs for filing a suit and obtaining a judgment. The amount required will vary based upon jurisdiction and the venue where the lawsuit is filed. In addition, these fees are not negotiable as these costs are set by the courts.

These costs, however, most times are non-contingent and may not be lost. If you win, the court costs in connection with the lawsuit may be recovered from the debtor and you are entitled to a full return of the costs advanced if the debtor is required to pay costs as part of the judgment. .

Attorney Suit Fees

Essentially, these fall into two classes –contingent and non-contingent. Contingent suite fees, i.e., a fee based on the amount of the account as well as the amount collected. In addition to the contingency fees already applied to any monies collected, suit fees may also be charged. In essence, the suit fee is an additional fee the attorney earns for filing suit, no matter if you are successful in collecting.

The attorney may require a non-contingent fee to handle the case. This is a portion of the fee which attorney will earn upon the filing of suit. The non-contingent suit fees be applied towards the total suit fee the attorney earns which normally does not exceed a total of 10%.

HOW LONG WILL THE AVERAGE CASE TAKE?

If everything goes the attorney’s way and you get a default or no acceptable defense judgment, you can figure on six to nine months. However, every case is different and if the debtor puts up a fight it could take several years before a resolution is reached. The “wheels of justice move slowly” and creditors right litigation is no different.

COLLECTING A JUDGMENT

You have won your case and received a judgement from the court against your former customer, now all you have to do is collect the money due. If the debtor is located in the jurisdiction that the suit was filed then garnishments, marshal/sheriff levies, i.e., direct action against the debtor is possible. However, collecting a judgement can be a complicated matter. The lawsuit should always be filed in the jurisdiction where the debtors and their assets are located. Using a national agency that has the experience as well as database of local attorneys who specialize in collection litigation is a plus. A national collection agency has highly trained staff members who are familiar with the various laws of each state and their expertise affords them the opportunity to “quarterback” your attorney. Their goal is the same as yours, to conclude the matter as quickly and professionally as possible and maximize the money that is recovered. Some of the benefits of using your agency to handle your lawsuits:

• The agency can employ local attorneys who are bonded and insured to move the case as quickly and expeditiously as the local courts will allow.

• The agency can act as an effective conduit between you and the local attorney, thereby collecting the maximum amount in the shortest possible time while protecting your interests.

• The agency has more expertise, in collecting debtor judgments, in terms of volume of accounts and trained and available staff than any law firm. It is their business and their only business.

CONCLUSION

In the event that an account that you submit to your collection agency winds up with an attorney for litigation, before filing a lawsuit, carefully evaluate your chances of winning before you throw good money after bad. However, many times a lawsuit is your best and only chance of collecting.Sam Fensterstock is Senior Vice President, Business Development, for AGA, a leading commercial collection agency based in Melville, NY. He can be reached at (631) 425-8800 or samf@agaltd.com.

In certain instances, a mechanic’s lien filed by a contractor, subcontractor or material supplier can become either “improper” or “invalid” under relevant lien statutes, or “defective” on its face. In such cases, the owner is entitled to remove and/or discharge the mechanic’s lien so that the property is no longer burdened by it.

Many states provide for a different process to properly record a lien against a residential property, as compared to a commercial property. Nevertheless, the process of discharging an improper or invalid lien is largely the same.

Some of the most common situations that give rise to a defective lien occur when: 1) the lien claim is without basis, 2) the amount of lien claim is excessive or misstated, 3) filing of the lien claim was not performed in accordance with the relevant lien law statute, or 4) filing of the lien claim was not performed in time prescribed by the relevant lien law statute. In such situations, lien claimants generally forfeit their lien rights, and, in some instances may forfeit additional or subsequent remedies.

Moreover, many states mechanic’s/construction lien statutes punish contractors, subcontractors and suppliers who willfully fail to remove or release such improper lien claims, especially, if the notice of invalid lien was given by a party challenging its validity.

If it has been determined that your lien claim is invalid or improper, you must first provide the appropriate notice to the property owner challenging the validity of your lien and, in some situations, to the general contractor. Once such notice is given, lien claimants generally are allowed some period of time to discharge or release their lien claims by making appropriate filing with the state’s real estate records. The period of time to release an improper lien varies depending on the state. If the improper lien was not released, a property owner may file a complaint with the court in the state where the lien was recorded. Many state statutes will allow property owners, who were forced to pursue court action to remove or release an improper lien, to recover court costs and legal fees incurred in pursuing such action.

Happy Fall Everyone! I just got back from attending CMA’s Fall CreditScape in Sonoma, California. What a great experience in a beautiful setting. At the Conference, we heard from subject matter experts and practitioners. Here were some of my observations from the event.

CMA President Mike Mitchell started off the conference with a session on maximizing your CMA membership; it is so important that we all know how to get the most for the money our companies pay for us to be members. Even though Mike presents this topic as a webinar (and if you haven’t heard it, you can register for the next one here, which will take place in November), it’s always better to see things like this in person, and to hear the questions that other credit managers have about some of CMA’s products and services, prompting some to consider the approach they take towards their jobs.

The Cash-to-Cash talk led by Bob Shultz gave attendees the big picture impact we as credit managers have on our organizations and the importance in understanding the cash cycle and how we need to get involved. Following the session, Shultz moderated a panel of CFOs who explained what they were looking for from their Credit Departments, including some of the metrics and discussions they wanted to have with their own teams. After lunch, there were a couple of valuable panelist discussions of how parts of the cash cycle can be improved and “how you get to ‘yes’,” which was a discussion of how to mitigate the risky transactions that do not necessarily qualify for the credit through the usual analysis. Options discussed by the panel included using Letters of Credit, filing a UCC, taking out credit insurance, and the software and service providers whose software helps improve their credit processes.

The second day started out with a lively discussion of the collection process by Bart Frankel. Bart went through a detailed six-step process for the attendees which included many good suggestions members could take back to the office. Attendees even practiced collection calls with each other with Bart moderating (and post-event survey responses proved that nearly everyone who attended was going to implement at least one thing Bart spoke about during this session when they got back to the office).

The conference also provided a high-level of networking opportunities. During the conference, members were able to talk to third-party vendors about their respective situations and what services were available so that members could improve their internal processes. Other networking opportunities included a couple of planned activities, a speed networking event and a vendor demo marketplace. In addition, Thursday evening at the hotel was a networking event for attendees, where members were able to get to know each other during a blind wine tasting event, in addition to the great new contacts I met during the event. I felt the event was incredibly useful to me and my business, and I had a great time as well.

I strongly encourage you take advantage of educational opportunities offered by CMA and NACM. By attending conferences, participating in a webinar, attending the CMA Annual Meeting, etc… you have put yourself in a category above your competition. Stay tuned for other upcoming offerings from CMA.

Thanks to all the credit practitioners, industry experts, and industry partners who participated in the many valuable conversations at CMA’s recent CreditScape Summit. Our goal was to create an interactive, collaborative learning environment, and I was so pleased with the high level of sharing among all participants throughout the two-day event.

I was equally pleased with the audience response to facilitator Bob Shultz’s approach to process improvements within what he calls the Cash-to-Cash cycle. Also known as the cash conversion cycle, Shultz emphasized that the role of credit management extends beyond basic credit and collections processes. There is the opportunity to impact the company’s liquidity through good inventory and accounts payable management, in addition to traditional accounts receivable management. Collections trainer Bart Frankel recommended that credit people take responsibility for helping to resolve issues that arise out of these “other” departments, as they ultimately impact the credit department’s effectiveness in granting credit and collecting receivables.

Experienced credit practitioners and other credit industry experts shared specific examples of how they successfully influenced and improved processes across the Cash-to-Cash cycle and created more cash flow from operations.

Another example of how CMA is advocating for the expansion of the traditional role of credit within the enterprise is the suggestion that credit can support procurement in evaluating the risk of critical suppliers. Recently, I had the unique opportunity to participate as a panelist in the fourth annual Global Supply Chain Management Conference at USC’s Marshall School of Business. As panel moderator, CMA Member Alvin Moreno, Director of Global Supply Chain Credit Risk with Nestle USA, made the case that the credit department is best positioned to help the procurement department assess the financial stability of a company’s suppliers. In the wake of shipper Hanjin’s bankruptcy, supply chain disruption has continued to grow as a concern for companies that rely on critical suppliers, which gives credit the opportunity to add new value to the business.

As a panelist, I told the audience of supply chain professionals about how CMA has worked with Alvin, his team at Nestle USA, and other CMA Members to create a special credit group in which credit managers collaborate on processes and best practices in supplier risk evaluations. More information about that collaboration is here.

Clearly, we at CMA are big fans of process improvement through collaborative learning. But as I mentioned in my opening remarks at CreditScape last week, credit managers need to step up and become credit leaders if they are to be successful in driving the organizational changes necessary to make those process improvements a reality.

How are you leading change in your organization? I welcome your feedback.

Lien waivers and releases, which were once just a way for owners and general contractors to make sure they wouldn’t have to pay for the same work or material twice, are now became something much more broader affecting much more than just a mere mechanic’s lien rights.

Mechanic’s liens (a.k.a. construction liens) are designed to provide additional protection and way to ensure payment for contractors, subcontractors or suppliers for the work provided or material supplied. A mechanic’s lien essentially gives the person or company an interest in the property equal to the unpaid amount, affecting the owner’s ability to convey or transfer the property free and clear without paying the amount owed. While such laws aim to protect contractors and subcontractors, it also creates a risk for property owners and real estate developers of paying for the same work or material twice. In an attempt to protect themselves, developers, property owners and contractors are now increasingly insistent on the practice of obtaining a signed waiver or release of lien rights to the extent actually paid, as condition to furnish any payments to contractors and subcontractors working on the project. However, signing such waivers may directly or indirectly cause for contractors and subcontractors to “sign away” many of their rights to dispute contractual and related project issues.

Modern-day construction lien waivers and releases became much broader than simply addressing mechanic’s liens. In some instances, signing a release not only waives the right to file a mechanic’s lien, but also waives the ability to file claims for any other related issues, such as breach of obligations by a party to a contract, delays caused by mismanagement of the project, or additional expenses incurred. Contractors, subcontractors and suppliers should remember to preserve their own rights when executing any construction waivers or releases. For example, if a subcontractor is concerned about underpayment, it could refuse to accept payment until the general contractor has been paid in full, or the subcontractor could accept payment, but note on the release that it was reserving the right to make certain additional claims.

Many projects usually only have one general contractor, and each general contractor knows all of its subcontractors or suppliers, each of whom may be eligible to file a mechanic’s lien. However, many state construction lien laws are now allowing tier 2 and tier 3 subcontractors, including suppliers and others with whom the general contractor has no direct relationship, to file mechanic’s liens, thus creating a much larger and potentially unknown number of parties that are able to create liability on the project. That is why many general contractors require their subcontractors to acquire signed lien releases from all other subcontractors and suppliers on a periodic basis before issuing any payments. One of most common issues challenging the ability to secure signed lien releases on a monthly basis is the struggle of many companies to maintain enough cash flow to make all of their payment obligations in time. It can be easy for companies to find themselves in a difficult situation in which they can’t afford to pay their subcontractors or suppliers right away, and, in the same time, they can’t obtain payment from the general contractor or the owner without first providing a signed release stating in turn that they have already paid everyone.

It is vital that general contractors and subcontractors review the proposed contractual language carefully in order to ensure the appropriate cash flow and lines of credit, so they are able to fulfill their payment obligation when required. Carefully review the exact terms of any release or waiver you are expected to sign. Exercise care before accepting any payment, particularly if the payment is not for the full amount owed. Most importantly, always remember that lien waivers are separate obligations, and no matter how unfair the underlying result may be, courts are very likely to uphold provisions of signed waiver or release.

The CreditScape Fall Summit, Powered by United TranzActions, an interactive learning seminar and workshop took place September 22-23 at the Doubletree by Hilton Sonoma. The event delivered the elements of a high-performing credit department, providing attendees with dozens of ideas to bring back to the office, according to preliminary survey results that were tabulated after the event.

With the common theme of “the elements of high performing credit departments,” attendees commented that the sessions gave them insights on understanding the entire cash-to-cash process, understanding credit from the standpoint of the CFO, getting to “yes” with the sales department, and especially the 6 steps to improving the collections process. Also a hit were the panel discussions where attendees heard from their peers how they have successfully implemented these processes.

Additionally, for the second event in a row, every person who submitted a preliminary survey said they’d likely recommend CreditScape to a colleague.

Here are some photos from the event:

Plans are forthcoming for CMA’s Spring event and will be announced as soon as possible.

How does an industry credit group get started, keep its original objectives and thrive? Take the case of 55-year-old CMA Group Underwater Sports.

On July 12, 1961, representatives from Healthways, US Divers, Voit, Swimmaster and Sportsways held the first official meeting of the newly formed Underwater Sports Equipment Credit Group facilitated by Credit Management Association. These pioneers knew that in order for this industry to grow, manufacturers and retailers must establish guidelines for extending credit, investigating and monitoring new and existing accounts and have a governing body to oversee that all state and Federal laws regarding free trade were adhered to.

Fifty five years later, this group is still instrumental in the industry utilizing the most current technology to insure that the original mission statement, which emphasized “looking for the latest methods to expand the business and the sport of diving,” is applied to each transaction.

Over the last twenty to thirty years, we have seen a dramatic change in the industry. The ownership of retail diving stores has transitioned from the businessman to the hobbyist. Manufacturers have expanded their product lines to encompass other sports and seasons and the group has gone from manual and paper reporting to entirely electronic. Information that took days to distribute now is instantaneous through the click of a mouse.

What has not changed is the value of the group to all in the industry. For the manufactures, having an immediate resource to verify a retailers credit worthiness, to the “Good Paying Account,” an opportunity to have more product lines available through positive payment experiences and to the “slow paying account,” the ability to deal with their suppliers to work out any problems or issues in order to maintain the flow of product needed to sustain the business, are all reasons the members keep coming back.

The diving industry suffered a major hit losing two of this nation’s most respected sporting goods retailers in 2016. Through the exchange of information, the members of the Underwater Sports group were able to identify certain trends and reduce their exposure considerably. A look at the list of the 20 largest creditors reveals that many Non-Diving manufacturers were not as fortunate.

As we conclude another diving season, we invite those manufacturers not participating in the group to investigate the benefits. For further information, contact Larry Convoy at lconvoy@emailcma.org or 818-972-5323.

A mechanic’s lien (also known as construction lien, laborer’s lien, artisan’s lien, supplier’s lien, materialman’s lien, and professional’s lien) is a special security interest that may be acquired in property by someone who expends material, resources or labor working on that property, and is, generally, effective until the lien holder gets paid for services provided. (Definition from Cornell University Law School, Legal Information Institute as published at https://www.law.cornell.edu/wex/mechanics_lien).

In some instances, tenant improvement work may lead to a mechanic’s lien on the owner’s property. Due to the fact that mechanic’s lien laws are not uniform in each state, there are many factors to consider when your company is getting involved with tenant improvement projects.

In Missouri, a contractor performing work for a tenant may acquire mechanic’s lien rights on a landlord’s property interest if certain factors surrounding the landlord-tenant agreement are present, including (but not limited to) the “mandated nature to perform a complete build-out” of the premises by tenant, and whether such “improvements are required and completed under the control of the owner with the view of improving the property.” See Crafton Contracting Co. v. Swenson Construction Co., No. ED102910 (Mo. App. E.D. April 12, 2016); see also Missouri Revised Statute § 429.010.

In Minnesota, a property owner is not subject to a mechanic’s lien for improvements contracted by another if the owner gives “adequate notice of the owner’s intent not to be bound” by such contract. See Marksman Const. Co., Inc. v. Mall of Am. Co., C0-97-1030, 1997 WL 757392 (Minn. Ct. App. 1997); see also M.S.A. § 514.06. This practice is also known in some states as the “Notice of Non-responsibility” and may require to be properly recorded by the owner with the county land records in order to be enforceable.

In Virginia, generally, a mechanic’s lien in tenant improvement projects extends only to that portion of property on which the laborer or materialman has worked, precluding the lien from extending to the entire building or property. See Elder-Jones, Inc. v. Byers, Inc., 23 Va. Cir. 40 (Va. Cir. Ct. 1990); see also VA Code Ann. § 43-20.

Similarly, Texas laws support the proposition that a lien on real property cannot be established simply by nature of a construction contract between a tenant of the property and the laborer or materialman, and the mechanic’s lien should attach only to the leasehold interest of the tenant, and not to the entire land interest of the owner. See 2811 Associates, Ltd. v. Metroplex Lighting and Elec., 65 S.W.2d 851, 852 (Tex. Ct. App. 1989).

In Maryland, a mathematical formula, estimating the value of improvements made to leased premises as compared to the value of entire building, will be used to determine if a mechanic’s lien is “substantial enough” to be placed on the entire building or property. See MD. Real Prop. Code Ann. § 9-103; see also Hurst v. V & M of Virginia, Inc., 293 Md. 575 (Md. App. 1982).

Given the complexities of the mechanic’s lien laws, it important to obtain all the relevant information on the tenant improvement project in order to better protect your lien rights and avoid becoming subject to various limitations. Please contact CMA’s Forms Filing team if you have questions.

CMA would like to send special thanks to top credit service providers who are sponsoring the upcoming CreditScape Fall Summit, powered by United TranzActions, September 22-23 at the Doubletree by Hilton Sonoma. Those companies are:

The first word all Industry Credit Group facilitators are taught to listen for at a group meeting is WE, as in WE should all stop selling or WE should all put him on COD. This is the most severe of the Anti-Trust violations, and collusion like this can cost companies millions in lawsuits and fines.

However, there is a circumstance where the group can invoke the WE word as in WE, the members of the CMA Industry Credit Group, would like the CMA Adjustment Bureau to contact our mutual customer to assist them in dealing with creditors during a rough period. In this circumstance, the role of the Adjustment Bureau, group members and other creditors is to keep this business operational while it works on a plan to resolve the issues that caused the problem and propose a repayment schedule.

Under this arrangement, creditors put off any legal demands for payment, agree to keep selling the customer and with a CMA staff member supervising, monitor the affairs of the business to insure that everything possible is being done to satisfy all parties. The cost to the group is ZERO.

Sounds too good to be true? In some cases it is and there is no solution to save the business. CMA’s Adjustment Bureau can provide a service to liquidate the company and make sure that ALL creditors receive their pro-rata share of the proceeds.

Sometimes, through no fault of their own, good companies have rough times. You can choose to deal with them by revoking terms, placing them for collection and if enough do, guarantee that this business will fold and you will receive pennies on the dollar or you can work with CMA and the debtor to save the business, recover all or a significant portion of your old debt and continue to have a customer for years to come.

If you group has a situation like this or if you want further information on this process, call Molly Froschauer at 818-972-5315.

Hello everyone! I was thinking about an issue recently that affects all Credit and Collections professionals, when is the right time to place an account with a collection agency. Though I won’t be talking about Shakespeare (as the title of my blog suggests), I used the reference because I find myself pondering this question very frequently, and it is at times a tough decision.

Let’s face it: the profession we work in is in many ways a grey area. Our decisions can quickly change depending on the information we receive, even one bit of information can alter our course. What can we do about it? If you haven’t already, I believe that every company should develop a procedure for placing accounts for collection. Your policy should address such issues as timing (how long does your company generally allow an account to be past due), dollar amount (does your company treat an account differently depending on the dollar amount outstanding), account status (does your company view the customer as a key account) and customer cooperation (is the customer willing, but unable or are you getting the silent treatment). If your company already has a policy regarding placing an account in collections I suggest that you review it periodically so that it accurately reflects your company’s culture. Once you have a procedure in place you have a guideline to follow.

Next we look at what information we have. We as credit managers are amazing at gathering, processing and summarizing information. Information in this situation would include: customer payment history, customer financial information (if shared), a third party report (Dun & Bradstreet, Experian, Equifax, etc…), your own experience in handling the customer, your CMA industry credit group experience and perhaps information from sales. We process this information and summarize it. We compare the information we have on hand to our company’s policy and then make our recommendation.

How do you decide when to put an account in collections? How long should you wait? What are things I look for before I submit to collections? We weigh the information in a department discussion, review our guidelines and then make our decision.

CMA’s collection partner AG Adjustments suggests you wait until you have exhausted your internal efforts, the customer is 60-90 days past due, they are not communicating and there are no new orders and the customer is unresponsive before placing for collections. What do you think? I’m interested in your thoughts and methodology. Please leave your comments at the bottom of this blog.

At some point you were responsible for selecting a new outside collection agency (OCA) and started providing them with past due accounts for collection. Now, one of the executives in your company’s financial department wants to know how the OCA is doing. He wants you to justify your selection. What factors are you going to consider that will allow you to determine whether the OCA’s overall performance is meeting your expectations or they are falling short?

There Are Two Types of Factors to Consider – Objective and Subjective

In evaluating an OCA’s operation there are many factors that have to be considered. First you have to determine the period of time that you want to evaluate. Most OCA’s would recommend that you us e a minimum of 12 months of placements with the review being done 90 days after the last file is placed. Some can be measured directly, like recovery rate and collection fees. Some cannot, like quality of the paper place due to factors such as age of debt and if it is disputed or not. Other factors like OCA personnel interaction with both you and your accounts. All are vitally important with respect to the OCA’s response to your needs and their results. So, let’s take a look at both types of factors that we need information on, under the assumption that once the information is gathered and evaluated, you will be able to justify about how well the OCA is performing and how your decision to use them has benefited your company.

Objective Factors

The prime objective factor that can be easily measured in the collection industry is the recovery percentage. How much you have turned over vs how much the OCA have collected. How is the OCA doing in collecting the accounts you have given them? What can they tell you about how they are doing it? You want complete transparency. Does your OCA have a web based platform that is available 24/7 that can provide you with detailed information? Can you easily obtain overall gross and net recovery rates? Can you view down to the individual account level all the way up to summary information on your total portfolio, over any period of time you require?

Additionally, is the platform easy to access and navigate for you to get this objective information? The web platform should be easy to use and provide you with all if the information you need to evaluate and track your OCA’s performance. You should also be able to query your data by account, by date, or range of dates, etc. Can you review all collector notes and communications? Do you have the ability to communicate with the collector if you have questions on an account? Can you export the data into any format you want such as Excel or PDF so that you can perform further analysis or use the data for in-house reporting?

What do you need to know?
• What is the quality of the paper that you have been sending to your OCA, how old is the debt and is the customer still open and operating? It’s almost impossible for an OCA to collect from a company that is out of business or in bankruptcy so strong consideration needs to be placed on the accounts being sent to your OCA and are they remotely collectable.

• For the accounts that are collectable, for the total time you have been doing business with the OCA, and by year and by month, and by account, what is their gross and net recovery returns (net is after adjustment for bankruptcies, uncollectable accounts, etc.)? This is an important number as it allows you to compare their results to published national averages as well as industry averages.

• Where does your OCA stand with your accounts today? You need a status report that lets you know how they are doing right now. What does your current portfolio look like, how much has been collected so far, in total, and by account. To the extent status codes and descriptors are used, what is the status of each account and what future activity anticipated.

• You need a payment history that shows the time to recovery from turnover to your receiving a check. Can you compute average recovery time so that you can do some cash forecasting based on the age of your portfolio?

• For auditing purposes, you need a track record of remittances sent to remittances received. You need to be able to verify that all payments the OCA has sent you have been received and deposited.

• All of the information should be exportable and sortable in to multiple formats. Can you sort a report by field from high to low, from low to high, or alphabetically, or by range of dates or by status code or by a combination of fields?

• You might also want your OCAs to provide any of their reports based on a specific subset of your accounts, such as by period of time the OCA has had the claim, by customer type, or by age past due at the time of placement. Any breakdown for a subset of accounts should be possible as long as you can extract accounts from the portfolio by some defined characteristic and then prepare a specific report just from the extracted accounts. Do they have ad-hoc query capability?

• Can you drill down to the individual account level and see in detail, how any individual account is being handled? Are the collector’s notes available and easy to understand? Can you use the account level report to easily access the collector either by email or by phone?

• Can you listen to recording of collectors calls on your files?

This is just some of the objective information you need to properly evaluate an OCA. If they can’t give you most of it, you might want to look for somebody that can.

Subjective Factors

These are qualitative items that can’t be measured with a number, but are just as important as the objective factors in evaluating an OCA’s performance. These are feel good items that measure your comfort level with the OCA, and if you are not comfortable with the objective factors regardless of how good they are, he OCA may not be sufficient for you to want to continue to do business with them.

What Subjective Factors Are Important?

• How they treat your accounts is critical. How does the OCA represent your brand? If they are too aggressive they may be making it impossible for you ever to do business with a customer again. Every once in a while an account may suffer a business downturn, so you don’t want to let an infrequent problem eliminate your chance of ever doing business with the customer again. And you certainly do not want to hear from the account’s lawyer that your OCA may be in violation of fair collection practices.

• Is this a professional outfit? If you do not feel you are being treated with respect, you may have a problem. The OCA needs to respond promptly to your emails or telephone calls. If you need some particular service, do they provide it without a hassle?

• Is the OCA easy to do business with? Are they flexible and do they have the ability to meet your needs, no matter those needs are? Working with and OCA many times is the last thing on your mind, but as you need them to manage a portion of your AR are they easy to work with?

• Do you like doing business with them? Do you like the people at the OCA? After all, collections is a “people business” and personal relationships are very important as they allow for far better communication and it’s easier to work with somebody you like than somebody you don’t. The chances of an OCA meeting your needs are far better if the parties get along than if they do not.

• Can they provide you with professional advice that can improve your in-house operations? An OCA should be able to give you an independent evaluation of your internal operations. While making you more efficient may cost them some short-term cash flow, it should guarantee your relationship for the long-term.

• Can you utilize advice from your OCA and their alliances to assist in your daily routines? Can you maximize your relationship and obtain information provided to protect your company from unexpected loses?

In Summary

As you can see, the review of your OCA’s performance is both objective and subjective. If you place business with your partners, both areas really need to be evaluated and should be on a consistent basis. While write-offs at most companies are insignificant, although expected, every dollar your OCA returns to you puts cash back to the bottom line. This further promotes the fact that the credit department can be more of a profit center, not just a cost center.

Sam Fensterstock is Senior Vice President, Business Development, for AGA, a leading commercial collection agency based in Melville, NY. He can be reached at (631) 425-8800 or samf@agaltd.com.

As the Olympics wind down this week, I wonder if any of our CMA members did business with companies in Rio before or during the international games? Or more generally, how many members currently export to Brazil? This serves to remind us that international credit sales will continue to grow as global commerce continues to evolve. As the economy becomes more and more globally focused, I wanted to take this opportunity to let our members know about some international tools and resources that are now available or coming soon to a California venue near you:

• International trade data now available on the NACM NTCR. Many NACM members report their international trade to the NACM National Trade Database, which is now available to CMA members in the enhanced version of the NTCR launched last week. Additional international trade data is available from Skyminder, Experian, Dun & Bradstreet, and Equifax Canadian.

• Understanding International Credit. In October, Eddy Sumar, MBA, CCE, CICE, and CEW will take you on an exciting journey through the world of international credit. If your company engages in limited exports or none at all, Eddy’s boundless energy and expertise in export trade credit will make you wish it did. His popular and engaging seminar will highlight resources made available through CMA’s partnership with U.S. Department of Commerce and other government agencies.

• West Coast Trade and Working Capital Conference. In November, the Global Trade Review (GTR) will host experts from various trade finance sectors to discuss how global markets have impacted trade for both corporations and banks, an update on current capital needs and availability. Gary Mendell, President of credit insurance broker Meridian Finance, and long-time supporter of CMA’s members, has recommended this conference in San Jose because he believes that it is one of the best international forums he attends each year.

Even though most CMA members do not engage in significant exporting, we believe it is important for CMA to remain committed to providing international credit resources to support the growing trend toward global sales.

What are your biggest challenges in international credit? I’d love to hear your feedback.

If you supply materials or labor to construction projects, make sure that you protect your company’s lien rights under the law. In doing so, remember that it is crucial to file liens properly and in a timely fashion.

A Wisconsin contractor will serve 45 days in jail and will pay a $3,505.46 fine for wrongfully filing the lien against residential property in Winnebago County, Wisconsin. According to the Oshkosh Northwestern, a 51-year-old owner of the local construction company illegally filed a construction lien on the residential home without giving proper notice to the homeowners as required by Wisconsin Construction Lien Laws. The homeowners discovered the wrongfully recorded lien when they contacted a financial institution in the attempt to refinance their property.

The contractor has been convicted with criminal slander of title after a jury determined he illegally filed a lien against the owners without properly notifying them. Moreover, the Winnebago County Circuit Court ordered the contractor to pay a $3,505.46 fine, and imposed additional restrictions on the contractor’s personal and business affairs, which included such obligations as – to inform potential customers about the conviction; to not have or use alcohol, drugs or paraphernalia; to submit a DNA sample; to not control any bank accounts; and to undergo any additional necessary counseling as may be required.

According to the contractor, he did notify the property owners but later lost the paperwork that would prove the fact that proper notice was given, and subsequently released the lien. “It’s amazing that, as a contractor, I can go to somebody’s house … and they decide they’re not going to pay for 50 percent of it, and then all of a sudden they can be suing me.” – the contractor told USA TODAY NETWORK-Wisconsin.

Attention Southern California construction-related companies: if you sell on job accounts, CMA has created an opportunity to meet with credit managers from other construction industry credit groups to discuss current jobs and common accounts.

The meeting will take place Thursday, October 13 at 9:00am. Members of the Aluminum Suppliers, Electric, Glass and Metal, Wholesale Roofing, HVAC SoCal, SoCal Building Materials, Building Materials Manufacturers, Steel Warehouse, are invited, but other companies who have common accounts with those industries are also welcome to join. As a bonus, guest speaker Christopher Ng, Esq. of Gibbs Giden will speak on a construction-related topic. The meeting will take the place of the regularly scheduled October group meeting for those groups.

Following is an excerpt from my workshop at the upcoming CreditScape Summit and Workshops in Sonoma, CA, Sept. 22-23. I sincerely look forward to meeting many of you at the event to discuss this in much more detail.
First let’s define the Order-to-Cash Cycle (O2CC). It can be defined in an 11-step process as follows:

The sales call

The credit check

Contract payment terms and conditions

Order entry

Shipping

Billing

COLLECTIONS

Legal action

Cash Application

Customer Statements

Customer payment history

“Collections” is in capital letters because, without it, the majority part of the cash flow process would not be as successful as it should be. The “Sixth Step of the Collection Process” in Phone Power Collections is the nucleus of the other 10 functions of O2CC. If any of these functions go wrong, it would be the responsibility of the Collection Process, not only to fix itself, but to also fix the other 10 steps to make the O2CC process more efficient. No process is perfect, but we all have the responsibility to strive for perfection through best business practices of the O2CC process.
For example:

If the sales department is quoting 45-day payment terms, when in fact your organization’s payment terms are 30 days, then the collections department needs to meet with the sales department to ensure the correct payment terms are quoted to the customer. If the sales department makes a “special deal” with a particular customer for a 60-day payment, then the sales department needs to get prior approval from the finance department and then notify the legal department about the special payment terms for contract purposes.

If order entry is not putting the Purchase Order number on the order sheet for the billing department to put it on the customer invoice, this would be a good excuse for the customer not to pay if this is a customer requirement.

Similarly, if shipping continues to short or over ship items to the customer, this will cause lost revenue or delayed collection. In this case, procedures need to be tightened up in shipping to minimize over and short shipping.

In cash application, if there is a big backlog in unapplied cash, the customer would not receive an accurate customer statement and not pay timely until all unapplied cash to their account is posted. Likewise, all customer statements must be mailed out two days after the month-end closing to ensure timely review, by the customer, for accuracy on their statements.

I look forward to sharing the rest of this presentation with you at the upcoming CreditScape conference in Sonoma this September.

Each of these points and more will be discussed in-depth at the upcoming CreditScape Summit and Workshops in Sonoma, CA on September 22-23, 2016. Come to CreditScape, learn from experts and peers who have done this, share you own experiences with others. For more information, visit www.CreditScapeConference.com.

Bart Frankel is a professional speaker who was responsible for a $7 billion Order-to-Cash process when he was the Manager of Financial Services for the Pratt & Whitney Division of United Technologies for more than 20 years.

As credit managers in the journey to bring revenue to our organizations while monitoring the accounts receivable investment, we have many “detours” along the way. However, like any trip, there are opportunities that we can either recognize, ignore or perhaps not even realize when they come our way.

Certainly the risk elements that so many of us know – the “C’s” of credit – are critical to getting to “yes.” You probably know the “C’s” of Credit – Character, Capacity, Capital, Conditions and Collateral. These risk characteristics, in some form, will lead us to mitigation tools which can minimize risk. In addition, if you deal in global credit (maybe not today, but perhaps your organization buys/expands into international markets tomorrow), you will also encounter the additional “C’s” of global risk, Country, Culture and Currency.

I have realized in my own treasury and accounts receivable experience an area often under-emphasized: the “soft skills” that are critical components in reaching “yes.” These techniques involve understanding how effectively we communicate, listen, react and reflect before taking action. Do we successfully consider the needs of the “other” person in the path to get us to our goal – not just the customer – but in our organization?

We all know the “Golden Rule:” “Do unto others as you would have them do unto you.” This rule assumes others want to be treated like you. Dr. Tony Alessandra developed the “Platinum Rule:” “Treat others the way they want to be treated.” It’s not so much what I want, but accommodating the feelings and needs of others (and not just customers), but those in our own organization that are in the line of getting to “yes:” sales, marketing, IT, HR, manufacturing, purchasing, to name a few.

At the upcoming CreditScape conference in Sonoma this September, I look forward to your sharing input regarding this approach to “Yes.”

This is just a surface view of the idea of “how to get to yes in your credit decisioning process.. Each of these points and more will be discussed in-depth at the upcoming CreditScape Summit and Workshops in Sonoma, CA on September 22-23, 2016. Come to CreditScape, learn from experts and peers who have done this, share you own experiences with others. For more information, visit www.CreditScapeConference.com.

Paul Beretz, CICE (Certified International Credit Executive), is Managing Director of Pacific Business Solutions, a company he created in 1999. In addition, he is a founding partner of Q2C (Quote to Cash) Solutions. He brings over 30 years of global, corporate experience in finance and management with industries such as telecommunications, semi-conductors, forest products, chemicals, plastics and consumer products among others. His expertise includes analyzing opportunities and providing resolutions in the order-through-collect cycle for manufacturers, distributors and service companies located worldwide.

A company’s cash flow is dependent on a lot more than just credit policies and collections. Every credit professional plays a larger role than just managing these areas. If you want to add real value to the total operation, you must understand the “Cash-to-Cash Cycle.” How is the cash conversion cycle measured? What are the components that drive performance? What departments or stakeholders are affected by your department’s decisions or delays? How does your department impact overall company results?

To start, you have to see liquidity management through the eyes of a Treasurer, Chief Financial Officer, CEO or Owner. They are concerned with how departments work together to meet company strategies and goals. To them it is critical to balance inflows and outflows, to meet forecasts, and minimize the need for borrowing. They want to get products out the door to meet or beat competition with excellent service and speed. To manage effectively, performance tracking and transparency are a must.

At the upcoming CreditScape Summit and Workshops, powered by UTA, we will be exploring how a credit professional impacts each component of the “Cash to Cash Cycle”; Days Inventory Outstanding (DIO), Days Payables Outstanding (DPO) and of course Days Sales Outstanding (DSO). We will dive into the causes of delays in “cash days” and what you can do about them.

You will be able to share your challenges and ideas with a panel of Chief Financial Officers and your peers. We will discuss actions you can take to improve performance and demonstrate your value. Come to CreditScape and better understand cash to cash management. You will leave with an action plan for improvements you can start immediately.

This is just a surface view of the cash-to-cash cycle. Each of these points and more will be discussed in-depth at the upcoming CreditScape Summit and Workshops in Sonoma, CA on September 22-23, 2016. Come to CreditScape, learn from experts and peers who have done this, share you own experiences with others. For more information, visit www.CreditScapeConference.com.

Robert S. Shultz is a Partner at Quote to Cash Solutions (Q2C) LLC. He will also be moderating several of the panel discussions and workshops at CreditScape.

We work in a “do more with less” world. Practitioners in the credit department are impacted more than most. Dedication to process improvement is the only way to achieve high-performance results in the face of ever-shrinking budgets.

At CMA, we’ve had numerous conversations and phone calls from members who tell us that they are trying to do more with less, or that their departments have been downsized. As a response to those conversations, CMA has created an event that is designed to help credit managers with all levels of experience and expertise to leverage the knowledge and experiences of practitioners who have implemented elements of high-performing credit departments, with a complete 360-degree overview of why, when and how to implement those elements to help your department achieve its maximum performance.

The 2016 CreditScape Fall Summit and Workshops, powered by United TranzActions, will feature two days of workshop training, expert practical and legal advice, and networking with other credit professionals. The goal of CreditScape is to provide an opportunity for credit practitioners at all levels of experience and expertise to come together to solve problems and provide solutions for their real-world issues they face at work.

Over the next few days, three of our panel and workshop moderators for the event, Robert Shultz, Bart Frankel and Paul Beretz, will be guest blogging about the cash-to-cash cycle, how to get to “yes” in credit decisioning, and how collections fits into the cash-to-cash cycle.

We invite you to join Robert, Bart and Paul at the Fall CreditScape Summit and Workshops, powered by UTA, September 22-23, 2016 at the Doubletree by Hilton Sonoma (or view the website at www.creditscapeconference.com) , and to read their blogs, as the information you’ll receive can help you save time and resources in the long run.

What elements of the high-performing credit department are you the most interested in learning about? We welcome your feedback.

CMA is proud to make available the newly redesigned NACM National Trade Credit Report (NTCR) to its members.

The report, which acts as the perfect complement to the major bureau reports, includes information from the majority of NACM affiliate members. The NTCR is especially excellent in industries such as: Construction, Steel, Metal and Aluminum, and covers companies throughout the entire United States.

For those credit professionals who are interested in implementing process improvements in their credit departments, striving for a high-performing credit operation, you won’t want to miss the CreditScape Fall Summit, powered by UTA, September 22-23, 2016 in Sonoma, CA.

We work in a “do more with less” world. Practitioners in the CreditScape are impacted more than most. Dedication to process improvement is one of the only ways to achieve high-performance results in the face of ever-shrinking budgets. The CreditScape Fall Summit provides a powerful opportunity to hear from highly successful credit experts and share decidedly effective best-practices with credit colleagues from a wide range of companies and industries.

Experience CMA’s unique, highly-rated event that balances a mixture of subject-matter expertise, peer-to-peer experience, and credit industry solution providers in a safe, facilitated workshop setting. CreditScape gives attendees an opportunity to identify problems and formulate solutions that can be taken back to the office. There is no substitute for the value of sharing real-world experiences with peers outside your company and outside your industry.

Following is the schedule of events, speakers and sessions for CreditScape:

Thursday, September 22

8:00 – 9:30 AM Bonus pre-conference Maximize Your Membership session

Instructor: CMA Staff

Learn from CMA staff how you can be sure that you’re maximizing your CMA membership investment by using all of the applicable services that can help your credit department.

10:00 – 10:30 AM: Intro – Cash-to-Cash: What is it and why does it matter?
Facilitator: Bob Shultz

Whether they realize it or not, credit and collection managers have an impact on the entire cash-to-cash cycle. 30-year credit veteran, consultant, and UCLA Extension instructor Bob Shultz will kick off the Fall Summit with an explanation of the cash to cash cycle, then lead attendees through workshop exercises designed to help benchmark their own processes.

10:30 AM-NOON – The Role of the Credit Department from the Viewpoint of a CFO
Facilitator: Bob Shultz
Panelists: CFOs, VP of Finance, Treasurer (TBD)

CFOs will discuss how they see the role of the Credit Manager in the cash-to-cash cycle, the greatest challenges they face, and their expectations of Credit Managers to address those challenges.

The Credit Manager’s job is to find a way to say “yes” to every credit sale. Bringing over 30 years of global experience in credit, finance, and management, Paul Beretz, CICE, will lead a panel of practitioners and other experts to discuss how they get to “yes” while protecting the company’s ability to get paid. Discussions will include:
• Payment processing/check guarantee
• UCCs
• Credit insurance
• Letters of Credit
• Spot factoring
• Alternative financing options
• Legal Enhancements/guarantees/escrow agreements

Bart Frankel was the highest-rated trainer at last year’s Fall Summit, and now he’s back in an expanded training program that will focus even more time on role-playing the toughest collection calls. As the Manager of Financial Services for the Pratt & Whitney Division of United Technologies for over 20 years, Bart was responsible for a $7 billion Order-to-Cash process. Participants will work with Bart and with each other to learn his highly successful 6-step process for getting paid. Bart’s advice is: improve processes early in the Order-to-Cash cycle to mitigate or even avoid collection efforts on the back end. This presentation is a must attend workshop for credit and collection teams!

Meet in small groups with service providers whose offerings could allow your credit department to realize efficiencies in areas such as accounts receivable management, collections, payment processing, workflow management, cash application, and more. Service providers will lead the discussions in their areas of expertise. You choose the meetings and discussion topics around solutions that would help you and your company.

12:30-2:00 PM – Lunch and wrap-up session; share your takeaways!

NOTE: All speakers and contents of this program are subject to change. This schedule last updated August 1, 2016

Greetings CMA members! I can’t believe that we are in the middle of summer. Time sure flies. For this month’s blog I wanted to talk about our customers and techniques I use to build a relationship with them. Some of our customers drive us mad, some of our customers are fabulous and some are somewhere in between. One valuable tool I use as a credit manager is the customer visit. Understanding that each of us works with a budget (both fiscal and time) that determines who we can visit, I strongly encourage you to attempt to visit as many of your customers as possible.

Depending on factors such as your industry, dollar purchase volume, your company’s risk tolerance, etc., I suggest that you make a checklist of those key customers you would like to see and why. The “why” provides the justification to management for you to be out of the office, and it also proves that you’re taking a proactive (instead of reactive) stance towards your job.

The next step is to approach your boss with the list and be prepared to discuss the “why.” I have found over the years that having that initiating a personal connection with a customer pays off in terms of obtaining financial information, and it provides a far better understanding of the customer’s business including its challenges and a relationship with a company that can directly impact your company’s performance. For example, I had a key customer contact me directly with all the pertinent information regarding the removal of a key member of its management team before it went public just so I would know what had really happened. This is the type of relationship I strive for with all our key customers. Is it practical? Perhaps not, but it is important to try. If your budget is tight and an actual visit is not possible, then I suggest that you give your contact a call to see how he/she is doing and how the company is doing. Be sure to get their e-mail address so that you can touch base periodically. Communication is truly the key to success in any business relationship.

What methods do you use to build relationships with your customers? I’d love to hear about them. Please respond to the blog below.

CMA is proud to announce the hiring of Sergey Garanyants to manage its Construction Forms Filing Services (CFFS) team and offerings in CMA’s North Las Vegas office. Sergey, who obtained his Juris Doctor Degree from Loyola University New Orleans – College of Law, Class of 2015, offers his law background to help companies protect their lien rights under the law.

According to the American Bankruptcy Institute (ABI) data that was provided by Epiq Systems Inc. , total commercial filings during the first six months of the year (Jan. 1-June 30) increased 29 percent to 19,470 over the 15,071 total commercial filings during the same period in 2015. Commercial Chapter 11 filings also rose during the first half of 2016 as the 3,220 filings represented a 25 percent increase over the 2,575 commercial chapter 11 filings during the first six months of 2015.

“Data like this underscores the importance of regularly attending Industry Credit Group meetings and keeping up on alerts and RFIs on anscers,” said CMA President and CEO Mike Mitchell. “Our members have identified the trouble signs of companies big and small and have taken steps to regularly discuss troubled or slow-paying customers and have repeatedly had the upper hand on some of these accounts months before they filed.”

Fortunately, the members of one of our industry trade groups saw some warning signs several months ago and took action. They made this account a permanent one for meeting review, meaning it showed up as an RFI every month automatically. They monitored newspaper stories and internet reports and had their group facilitator distribute. They made it a regular account clearance on all conference calls, shared any information they received and individually took action to reduce their company’s exposure. A conservative estimate shows them being 3-5 months ahead in identifying trends than non-members.

“The business insolvency world has been slow for awhile, with sporadic, larger bankruptcies affecting our members,” said Molly Froschauer, general manager of CMA’s Adjustment Bureau, which provides innovative alternative solutions to creditors and distressed businesses. “At CMA Adjustments, we’re seeing business pick up but don’t yet know if the historically slow bankruptcy numbers are going to return to the normal level or if it’s a market blip. As we see businesses shutting their doors, our members’ rights should be protected and, whether it’s to put you in touch with an experienced bankruptcy attorney or to give you simple advice, we’re here for our members and to offer guidance should businesses begin to file many more bankruptcies.”

One of the greatest benefits of joining an association is the offering of professional educational opportunities to advance its members’ knowledge. The July CMA Member of the Month is someone who has taken advantage of that knowledge, and in turn received her professional designation.

In this past testing period, Lorie Mohs of American International Supply, was the only CMA member who passed the certification to receive her Credit Business Associate (CBA) designation. In addition, she regularly attends CMA and NACM events, including the recent NACM National Credit Congress in Las Vegas, along with other seminars and webinars offered throughout the year.

She is also a regular and active contributing member of the HVAC and Plumbing Suppliers industry credit group.

“The NACM certification program is a way for credit professionals to demonstrate their skill levels across many different industries,” said CMA President and CEO Mike Mitchell. “After speaking with several hiring managers from prominent companies, they acknowledged that having obtained a professional designation puts a credit professional at an advantage over others who have not done so. We applaud Lorie for her commitment and hope she continues to advance through the entire designation program.”

On behalf of the Credit Management community, congratulations Lorie for this honor, and thanks for being an active member of CMA.

Members of the Month are nominated by CMA members, Group members, volunteers and CMA staff to highlight those members (or member companies) whose engagement with CMA has helped improve the overall credit profession for others.

For more information on how you can participate in any of the areas mentioned within this article, or to nominate any members for this honor, contact Diana Escobar at descobar@emailcma.org or 818-972-5300.

What if you could get payment experience directly from other suppliers like you from all over the country? That sounds like a job for Equifax, Experian, and Dun & Bradstreet. But what if some of that data is never provided to the large commercial bureaus? As valuable as those bureaus can be (and CMA proudly offers the reports of all three bureaus to members), the fact is that many companies cannot or will not report payment experience except to NACM trade groups. Back in 2010, I had the privilege of working with the founding group of NACM Affiliate leaders who envisioned combining all trade line data from all NACM trade groups into one, easy-to-use credit reporting database. In 2011, the NACM National Trade Credit Report (NTCR) was born and has become one of the most valuable trade information resources for CMA and NACM members across the country.

Besides expanding the database that now includes tradelines from over 12,000 NACM members meeting in 40 different NACM locations throughout the nation, the NTCR hasn’t really changed that much…until now. CMA is excited to offer a much enhanced version of the NTCR on August 1. New features include:

You’re now more likely to find information on the companies you’re looking for.

You will also be able to find international trade data,

Collection claims and other credit alerts,

Financial institution and banking data where available,

Bankruptcies and UCC filings, and

Corporate information.

The NTCR report format has been redesigned for ease of use, and even though this wonderful complement to the commercial bureau reports is priced very competitively, members that contribute their full aging files will get 25 free NTCR reports each year and discounted report pricing if you need to order more.

The NACM National Trade Credit Report is the quintessential example of how the NACM family of Affiliates working together with leadership from NACM National can create unique value for all of its members. Please remember that this report is only available to members, and if you haven’t had success with this report in the past, I hope you will give it another look when the enhanced report becomes available on August 1 on anscers.com. Thanks to all of our members who have supported this effort with your trade data – it wouldn’t have been possible without you.

Finding companies that would fit in your industry credit group is not a difficult task. There are trade publications, mailing lists, associations and websites where you can input a company name and receive a list of that company’s competitors. The challenge is convincing an owner who has never been involved in a group to allow his credit manager to sit down with the competition and discuss their customers’ paying habits. To an “old school” individual, this is against every business principle they know. So how do we (and I am including officers and
current members) communicate the advantages when this would involve working with the enemy?

One method is waiting for the opportune time. Recently, a group approached a company owner that lost a great deal of money by not knowing that a bankruptcy was approaching. His pain was magnified when he learned that his competitors were aware of the problem months before and reduced their exposure. They will join the group if they survive.

Another method is owner-to-owner direct contact. Chances are, some member of the group has an owner or executive who knows the right person at the prospect company. A phone call explaining how the group has saved them $$$, reduced money spent on report contracts, lowered write-offs and improved their credit departments efficiency through the Best Practices exchange, carries a great deal of weight.

Finding, vetting and securing new members is a task requiring group members and the group facilitator working together. Keep in mind the selling points that convinced your company to join and apply them to any potential prospects.

The whole of Group participation is far greater than simply the sum of its parts. In your next Group meeting, let us know who we’re missing.

Greetings everyone! As you probably know by now, I am a huge proponent of education. I feel that every little nugget that I take away helps me to be a better credit professional and add to my skill set. I’ve achieved the CCE designation, and I try to attend every CMA or NACM event that I can, schedule permitting, as all of them have offered something that I can bring back to the office and implement.

I just got back from the NACM National Credit Congress in Las Vegas and had a great experience. The conference offered a great selection of session topics such as how a credit manager can protect him or herself when selling into Latin America to cloud based solutions for the credit department. Aside from the amazing educational offerings, Credit Congress offers its members the opportunity for networking with other credit professionals from all over the country which can be invaluable. In addition to the education and networking, attendees can talk to various service providers including NACM in the conference’s Expo center to find out about services that are available to credit professionals to make our jobs better and more efficient. I truly believe that information is the key to our success and it is what sets us apart from everyone else.

From the information gained from the packed rooms of the sessions I attended, to the different service providers whom I spoke with, to the cocktail receptions I reconnected with old friends and met new ones, to the client dinners I went to, I felt that my attendance at this event helped reassure that my company’s credit operations are going in the right direction. If you haven’t attended an event like this one, CreditScape or Western Region Credit Conference, I can’t express how valuable it is to experience firsthand what other credit departments are doing to maximize efficiency.

For those who attended the event (and more than 100 CMA members did!), what were your biggest takeaways? I’d love to get your feedback.

House Small Business Committee Chairman Rep. Steve Chabot joined congressman Cresent Hardy for a small business roundtable on Monday, June 20, at the CMA North Las Vegas office. The audience of more than 20 business owners and local chambers of commerce discussed the increased cost of doing business that overreaching regulatory burdens have on our small business owners. They also brainstormed on allowing for a better environment to create jobs in North Las Vegas. Among the topics discussed by the bipartisan crowd of small business owners were the challenges of SBA funding, difficult tax codes, the effects of a minimum wage hike and overtime rules. If you’re located in the Las Vegas area and your business has been affected by over-regulation, please let the congressman’s office know at kelly.espinoza@mail.house.gov.

This morning, I delivered my quarterly webinar presentation, “Maximize Your CMA Membership,” which I present to our newest CMA members and credit professionals to help them learn about the myriad of resources a CMA membership has to offer. This morning, I started with an online poll, asking the participants, “What are the reasons you joined CMA?” As always, the two most popular reasons for joining are “networking” and “professional development.” And for good reason – there is a limit to what you can learn and information you can gather by electronic means alone. In keeping with this value we hold so dear at CMA, I attended Credit Congress last week, NACM’s premier educational and networking event. Based on our members’ feedback and my own participation in sessions, I learned that networking with your peers and professional development are alive and well and more vital than ever.

What continues to excite me about in-person conferences is what you learn when the audience engages with the presenters – people ask questions and share their own experiences, and the subject matter experts give practical advice to challenges and issues that are not part of the slide deck. I learned more about what our members are facing in their work environments (doing more with less, shrinking budgets, using more tools and technology) than about the credit topics themselves. Never underestimate the power of good catharsis – I can’t tell you how many people nodded their heads and grinned with relief when they heard someone talk about the same challenges that they face.

I also want to acknowledge the many credit vendors who supported the event with their own knowledge, expertise, and tools. I spent many hours talking with many vendors at the Expo, and I learned that many of these providers have played a vital role in helping the credit function and profession progress and evolve. If it weren’t for these companies (many of them small start-ups) investing their time, treasure and talent in the service of credit, our members would not have the tools and resources they need to compete in an ever-changing and risky business environment. We appreciate that many credit vendors have become as valuable an advocate for the credit profession as the credit associations!

By emphasizing the value of networking, peer-to-peer learning, and vendor support, I don’t want to minimize the contributions of the presenters and quality of their content at Credit Congress, which appeared consistently strong and on-topic. Thanks to NACM for continuing to provide a high quality, high value experience for our members.

A healthy turnout for Credit Congress and positive feedback from our members who attended has shown us that there continues to be good reason to offer these kinds of programs to our credit community. Now I am more excited than ever about CMA’s upcoming CreditScape Fall Summit (September 22-23 in Sonoma County) that will immerse all attendees in a learning environment designed to help them discover ways to improve their credit and collection processes.

So that’s what I learned at Credit Congress — what will you learn at our next event?

CMA offers more than 50 industry credit groups and networks at the local and national level; including food and beverage, construction, health care equipment and many more.

As a former Credit & Collections Manager who was responsible for managing risk, I valued and relied on my Industry Credit Group so much that I decided to share 25 good reasons why credit professionals need to consider joining an Industry Credit Group.

Industry Credit Groups offer the opportunity to find a mentor (I found several)

Industry Credit Groups offer the opportunity to be a mentor

Industry Credit Groups help you expand industry knowledge

Industry Credit Groups help you understand your competitors better

Industry Credit Groups help you expand professional network

Industry Credit Groups help you differentiate yourself as a skilled and much sought after credit professional

Industry Credit Groups help expand your company’s brand awareness

CMA professionals facilitate all group meetings and information exchanges in strict compliance with U.S. antitrust laws. Industry Credit Groups give you the proprietary information you need to make fast, accurate credit decisions. If you have any questions please don’t hesitate to contact me (or any of CMA’s other representatives). We look forward to your participation in CMA’s Industry Credit Groups!

The CMA Las Vegas Office recently hosted an open house and networking event for nearly 50 Las Vegas-area credit managers, CMA Members and Board of Directors members, on May 20. The open house is an annual event with the sole purpose of allowing members to meet and network in an informal setting. Below are some pictures from the event. Thanks to everyone who came out, and we look forward to creating more networking opportunities for Las Vegas-area credit managers in the near future.

It seems that each month, a different industry feels the pain of losing one or more of their big players. It started in the Electronics industry a few years with Circuit City, moved over to the Grocery chains, department stores and last month it hit the Sporting Goods industry with 2 majors closing their doors. Besides having an impact on those who are losing their jobs, the amount of revenue these Big Box dealers generated may have been the only thing keeping some manufacturers profitable.

Fortunately, the members of one of our industry trade groups saw some warning signs several months ago and took action. They made this account a permanent one for meeting review, meaning it showed up as an RFI every month automatically. They monitored newspaper stories and internet reports and had their group facilitator distribute. They made it a regular account clearance on all conference calls, shared any information they received and individually took action to reduce their company’s exposure. A conservative estimate shows them being 3-5 months ahead in identifying trends than non-members.

As a result, they are in a better position to absorb any potential loss, certainly in a better position than some non-group members who have large exposures because they were not involved in the discussions over the last several months.

Many times when we approach a potential group member, their response is: “I only extend credit to Fortune 500 companies.” I am sure that those dealing with A&P, Haggens Food, Circuit City, Sport Chalet, Sports Authority, Blockbuster, Borders and Radio Shack to name a few all felt that they had a good handle on it.

We congratulate our industry group that identified a potential problem and took steps early to reduce their pain. The small financial investment they made in joining and participating in a group has paid off handsomely.

As we start a new “group year” with our new fiscal year beginning May 1, we encourage you to use all the tools CMA has to make sure you have the most current information on your customers, large and small.

Greetings! I hope everyone is having a good month. I was at an Industry Credit group meeting recently where I was thinking, nowadays everyone is concerned with saving money, minimizing expenses, etc…, so I decided to write this month’s blog on “How you can be a hero to your company.” As credit managers, we have the responsibility of reviewing our credit reporting services periodically for better pricing and enhancements to the products, similar to you obtaining car insurance quotes in your personal life when your insurance comes up for renewal. Whether you decide to change services or not, it’s always a good idea to be aware of what’s available in the marketplace today.

Here are some questions to ask: Do the reports you currently use include the best information you need to make informed credit decisions? Is there additional data that you’d like to see on the reports you’re using?

CMA is here to help. I encourage you to contact Terry Campos at CMA to help guide you through the process. She is a brand-neutral resource, with 44 years of experience working with NACM and the three major commercial credit reporting bureaus. If you are not happy with the service you are currently using, she will work with you to find another solution so that you don’t have to do this on your own.

I also recommend you participate in CMA’s free webinar series on credit reporting, which begins June 9th. You’ll be able to hear from Terry and reps from the credit bureaus as they talk about what’s new and provide an overview of their products. Sign up at www.creditmanagementassociation.org/events, I believe it will be well worth your time.

You can be a hero by saving your company money and making your job easier by being able to access quality credit information that helps you make sound credit decisions.

I look forward to seeing you at Credit Congress in June!

Tracy Rosenbach

Tracy Rosenbach, CCE, is the Financial Services Manager at Silgan Containers LLC and Chairperson of the CMA Board of Directors. She can be reached at 818-710-3729.

In an effort to explain credit management to the next generation, CMA’s partner Quote 2 Cash Solutions LLC, represented by Robert Shultz (Partner) took part in a panel discussion and career fair at the UCLA Extension campus on May 14. Titled “Career Success in Accounting and Finance,” Shultz, one of three Panelists, emphasized the importance of the credit function, fielded questions and later spoke privately to students interested in learning more about opportunities in this field.

“CMA believes it is imperative to attract young talent to the credit management profession. In talking to some of these students at the event, I am encouraged about the future generations of credit managers,” CMA President and CEO Mike Mitchell, who addressed questions at the CMA booth, said. “Our goal is to help ensure that there are plenty of great new credit management candidates for CMA members to hire.”

Shultz commented, “my most interesting take away was the one hand raised, out of the eighty or so attendees, when I asked how many understood the functions of a corporate credit department. This sort of outreach is an invaluable step to increasing interest and awareness of the credit profession.”

Last week, I came back from the American Bar Association Forum on Construction Law Annual Meeting in Nashville, Tennessee. On my last night there, my wife and I went to the Grand Ole Opry. One of the featured country artists that night asked the audience, “You know what happens when you play a country music record backwards? You get your truck back, you get your dog back, you get your wife back…” Well, after discussing California’s new Labor Code section 1720.9 (which goes into effect on July 1, 2016) with some of my colleagues from around the country, I couldn’t help but wonder if we here in California are headed backwards when it comes to making our prevailing wage law less cumbersome and taxpayer-funded construction projects less expensive.

California law has traditionally drawn a distinction between the performance of on-site construction labor and the supply of construction materials. AB 219 added new Labor Code section 1720.9, signaling the extension of a legislative trend adding significant complexity, risk and cost for contractors and material suppliers on public works of improvement.

Specifically, AB 219 abrogates and supersedes conflicting case law and a prior (non-precedential) coverage determination by the California Department of Industrial Relations that the delivery of ready-mix concrete to a public job does not constitute a public work subject to prevailing wage laws. As of July 1, 2016, the hauling and delivery of ready-mix concrete from a commercial plant to a public works job will be subject to California’s prevailing wage law.

The “hauling and delivery of ready-mixed concrete to carry out a public works contract” means the job duties for a ready mixer driver and includes receiving the concrete at the factory or batching plant and the return trip to the factory or batching plant. While AB 219 is specific to concrete suppliers, some believe that this is just the tip of the iceberg and that the co-sponsors of the new law (i.e., The California Teamsters Public Affairs Council, The State Building and Construction Trades Council, The California Labor Federation AFL-CIO) will push for additional legislation that could require prevailing wage for other material suppliers. What logical and legal justification exists for excluding the delivery of steel, lumber, paint, fuel, plumbing supplies, electrical components and even port-a-potties?

In the face of vociferous opposition from Associated General Contractors (AGC) and other industry associations, the labor organizations behind AB 219 convinced the legislature and Governor Brown that the new law was merely a logical expansion of prevailing wage law. Specifically, these advocates argued that concrete delivery was already subject to prevailing wage law if delivered by the project direct contractor or a subcontractor, but just not by a material supplier.

So what’s the big deal and what could possibly go wrong? Here are some highlights of the new law which apply to all public projects awarded after July 1, 2016:

The cost of almost every public construction project in California will increase; in fact, according to the AGC of California: (1) ready-mix producers estimate that the cost of concrete for projects under AB 219 would increase by 30 to 40 percent; (2) state agencies indicated that the fiscal impact of the new law will exceed $35,000,000; and (3) Caltrans estimated $1 million annually in administrative costs to administer
the law.

Ready-mix haulers and entities that deliver ready-mixed concrete to public works projects will be considered public works contractors under California Labor Code section 1722.1 and must register with the Department of Industrial Relations as set forth in Labor Code section 1725.5.

Because the material is perishable, a driver’s routine may last just 90 minutes or less (i.e., take load from the plant to the job, wait for truck to be unloaded and return to the plant) and a typical work day will often include deliveries to both public and private works of improvement; therefore, companies must implement a system that can divvy up each driver’s records on an hourly basis to separate private and public work pay records.

Before furnishing concrete to a public works job, a ready-mix supplier must enter into a written agreement with its contractor customers, which specifically requires compliance with prevailing wage law (can a standard credit agreement and subsequent exchange of a written quotation, purchase order and/or invoice ever suffice???).

Within three working days after their drivers have been paid for the prevailing wage work, ready-mix suppliers must submit certified payroll records to their contractor customers and each project’s direct contractor (if that’s a different entity), accompanied by a written time record certified by the individual driver(s).

As with other subcontractors subject to prevailing wage laws, contractors are ultimately responsible for unpaid prevailing wages and unpaid penalties resulting from improper wage payment or improper certified payroll record submission; as such, public works contractors assume more risk as their ready-mix supply “subcontractors” attempt to abide by these new requirements after July 1, 2016.

Without a doubt, California has further complicated its already cumbersome regulatory scheme for public works. Ready-mix suppliers must now gear up to navigate the complexities California prevailing wage law and contractors should double-check their standard form contracts to ensure they contemplate and properly allocated the new risks imposed by AB 219. For additional information and for F.A.Q., see the AB 219 Fact Sheet at http://www.calcima.org/pdf/AB219FactSheet.pdf

Here is a follow up from my column last month, when I mentioned a survey to determine which core skills members feel are the most important to credit managers. First, I want to thank all of the 133 members who took the time to respond to the survey. Second, I wanted to share the results and let you know how we will use the information to guide our development of skills training programs this year.

As a reminder, we asked members to rate 15 functional areas of the credit and collections cycle as “Very Important,” “Somewhat Important,” or “Not Important.” From the nearly 13% of CMA members who responded, “Communications Skills (verbal/written)” was rated most important (119 very important), followed by “Credit Basics” (116 very important), “Collection Techniques” (112 very important), “Customer Service Skills” (107 very important), and “Negotiation Skills” (105 very important). All other areas received ratings under 80 for very important (the complete list of results appears below).

To keep things interesting, the dozen in-depth interviews with CMA’s Board of Directors reflected some of the results above, also placing high value on Communications Skills, Collection Techniques, and Negotiation Skills. However, the group of CMA leaders rated Financial Skills (analysis and forecasting) much higher than the larger member sample, and appear to place a higher value on Leadership and Management Skills. Interestingly, Legal and Compliance issues received average ratings of importance, but we live in a nation of laws and operate in a business environment that is prone to legal risk and liability, so we’re going prescribe legal and compliance training anyway for the overall health of our members.

So what does this tell us about the training needs of our members’ credit operations? We believe that an online credit training program that initially addresses six core disciplines will benefit the vast majority of members who are charged with creating and conducting credit training programs without having the often significant time, resources, and expertise that are required to take on that responsibility. The CMA Credit Training Program will offer skills training in 1) written and verbal communications, 2) credit fundamentals (customer investigations, credit decisionmaking, setting credit lines), 3) collection techniques, 4) negotiations, 5) financial analysis, and 6) legal and compliance.

Look for more details later this summer, but in the meantime, I have a request. Part of the success of our recent CreditScape events was the contributions that experienced credit practitioners made to the workshop discussions. Sharing success stories and career-long best practices have added significant and unique value to our in person education sessions, and I would like to bring that same dynamic to our online credit training courses. If anyone reading this message feels that they have valuable experiences related to one of the core disciplines listed below, and you would be willing to work with me and other members to share those experiences and best practices with CMA members through this new program, please reach out to me so we can discuss a possible contribution.

I want to thank you again for your participation, as I look forward to helping evolve our education program into one that provides members with the topics they value most.

If you’re planning to attend the 2016 NACM Credit Congress in Las Vegas, June 12-15, one common product you’ll see at top vendor booths is CMA’s anscersX multibureau trade credit report, a single report that contains all the key elements about your customers’ paying habits needed to make most credit decisions.

Some of the credit industry’s top software companies soon will offer or have launched the anscersX report on their platforms , including TermSync, CreditPoint Software, Bectran, Credit & Management Systems Inc. (CMS), and eMagia/TheCreditApplication.com. Many will be demonstrating how anscersX can be accessed directly through their software at Credit Congress.

These leading software vendors will help their clients join the hundreds of companies who have already benefited from having instant access to this single report that contains all the key elements about your customers’ paying habits needed to make most credit decisions.

The anscersX multi-bureau trade credit report combines key factors from the three largest trade credit reporting agencies (Dun & Bradstreet, Experian and Equifax), giving credit managers the most complete payment story available. “The anscersX report offers some real advantages to anyone making a credit evaluation,” said CMA president Mike Mitchell. “Single-source Business Credit Reports are made up of accounts receivable data that has been contributed by companies, public record data and payment scores generated from the combination of this data. Since most companies that contribute accounts receivable data only send it to one provider (D&B, Experian or Equifax), using one report may provide only a piece of the payment habit story. I am thrilled that leading-edge software providers feel as strongly as we do that there is a real need for bringing this unique resource to the credit community, and I’m grateful that they are helping us introduce their clients to the power that the three largest credit bureaus can bring to credit decision-makers with limited time and budgets.”

The report, which is also available at www.anscers.com, ranges in price from $32.35 to $69.95, depending on the number of reporting agencies the user requests. Users control which reporting agencies are accessed for the report.

To learn more about the program, visit www.anscers.com or call 800-541-2622.

About Credit Management Association
Credit Management Association (CMA), which was founded in 1883, is a Glendale, Calif.-headquartered trade association with approximately 1,300 member companies representing over 250 different business categories selling regionally, nationally and internationally. CMA focuses on providing products and services that allow companies to make informed business decisions based on trade credit. CMA is one of the largest affiliates of the National Association of Credit Management (NACM), whose 45 affiliates serve all of North America. For more information, call 800-541-2622, or visit www.creditmanagementassociation.org.

It’s been more than a year since the launch of the anscersX multibureau trade credit report, which offers credit managers a one-click look at credit scores of their customers from the three major credit reporting bureaus. Since the report was launched, we’ve listened to our users and are proud to announce some valuable additions to the report aimed at helping you make quick and well-informed credit decisions.

The improved report includes more flexibility for you to choose the data you need and the price you will pay. It is now up to you to select data from one, two, or all three of the bureaus included in the anscersX Report (Dun and Bradstreet, Equifax and Experian).

We have added valuable information from Equifax including:

The Ultimate Parent

Headquarters Site information

Alternate Company Names & DBA’s

Owner/Guarantor

An easy to read Average Days Beyond Terms graph

Additional Report Highlights (# of accounts, # of delinquencies, charge offs and more

We have added valuable information from Experian including:

Years in File

The Date of Incorporation

SIC Code

An Industry Risk Comparison

anscersX pricing, which ranges from $32.35 to $69.95 depending on the combination of bureaus you choose, is a truly unique product that paints a true picture of your customers to help you better manage risk.

For those who would like to learn more about anscersX, I invite you to participate in an upcoming webinar exploring the anscersX report citing specific examples from the report. You can register here.

To download a sample report, visit www.anscers.com or contact me directly if you have any questions at 818-972-5361.

Credit Reporting can be the lifeblood of a credit manager’s decisioning process, but not all credit reports are created equally. Different reports have different strengths, and it’s to your company’s advantage to use the right information to protect your company’s receivables.

To educate you on these strengths, CMA is offering several webinars to help members learn about the basics features of major credit reports.

We hope that these sessions will guide you to understand which reports are best for managing risk for small and large businesses; explain new features and upgrades you may not have been aware of; and help you assess whether you’re using the right credit reporting solutions for your needs.

But credit cards are the most expensive payment channel because the interchange fees imposed by card companies erode the profitability of the sale.

While the strategy of surcharging is attractive for suppliers to offset the majority of this expense, suppliers are challenged to adopt the recently minted right-to-surcharge given the uncertainty surrounding all of the credit card litigation, especially the litigation pursued by national retailers against the card networks. The recent settlement between CVS and Visa and MasterCard may provide further clarity and comfort that card litigation will not bar supplier’s rolling out a surcharge.

Historically, the credit card networks (Visa, MasterCard and AmEx) have prohibited suppliers from surcharging customers. In 2004, several national retailers and trade associations (including the national drug store chain CVS Pharmacy) filed multiple lawsuits against Visa and MasterCard, accusing the card companies of conspiring to fix artificially-high interchange fees in violation of the Sherman Antitrust Act. The suits were consolidated and certified as a class in the U.S. District Court. After eight years of litigation, a federal judge in New York gave final approval of the Visa/MasterCard class action settlement. Under the class action rules, class claimants, primarily retailers, were given the option to either opt in or opt out of the class and the corresponding settlement with the card companies.

A number of retailers, including CVS Pharmacy, opted out of settlement, complaining it was not adequate. In particular, the retailers noted they would not surcharge their customers, consumers, as they would lose business.

In early 2014, CVS, and several other retailers, filed suit against Visa and MasterCard asserting similar accusations as the previous suit. CVS and Visa and MasterCard have settled their litigation.

What Does the CVS Settlement Mean for Suppliers’ Ability to Surcharge?

For suppliers seeking indicators that their right to surcharge is cemented, given all of the retailer litigation against Visa and MasterCard challenging their interchange pricing, the CVS settlement provides some certainty and guidance. It is expected that CVS is the first of many national retailers that will settle with Visa and MasterCard. These settlements reaffirm that Visa and MasterCard are determined to resolve the interchange pricing litigation which ensures that the supplier’s newly minted right to surcharge sticks.

Scott Blakeley, Esq., is a founder of BlakeleyLLP, where he advises companies around the United States and Canada regarding creditors’ rights, commercial law, e-commerce and bankruptcy law. He can be reached at seb@blakeleyllp.com.

Greetings! I am excited and honored to serve as your new CMA Chairperson. For those of you who don’t know me I’ve been a credit manager for 20+ years and a CMA member since December 1995. The challenges I face at work are likely the same ones you do: trying to manage credit risk; doing more with less; and trying to stay current with the latest trends in credit management in a changing industry.

Speaking of change our Credit Management Association (CMA) has begun a new chapter in its history with the move to the new office in Glendale. The association is working hard toward positioning itself for the future. We as credit managers need to be a part of that transition. We are fortunate to have CMA as a professional resource in turn we have the responsibility to give back to the association through volunteering. By volunteering we help to strengthen the association and shape it to the current needs of local credit managers. I encourage you to reach out in your local industry groups as well as call CMA to see how you can be a part of a much storied institution. Volunteer opportunities can include, but are not limited to, being an industry group leader, serving on a CMA committee or serving on the CMA board. We encourage your participation and need your input.

What’s Coming Up

To stay current in the credit management profession, there are a couple of wonderful opportunities for education coming up. In June we have the NACM Credit Congress in Las Vegas at Caesar’s Palace and in September CMA will be hosting Fall CreditScape in Sonoma. I have always felt that education is an important component to progressing in our profession which is why I worked toward and obtained my CCE designation several years ago. I encourage you to take a look at these offerings and support your association by participating and becoming engaged in its activities.

I look forward to serving you this year. Best regards,

Tracy Rosenbach
CMA Chairperson 2016 – 2017

Tracy Rosenbach, CCE, is the Financial Services Manager at Silgan Containers LLC and Chairperson of the CMA Board of Directors. She can be reached at 818-710-3729.

As a veteran credit manager of 30 years, Credit Management Association is an indispensable tool that I use for my career. As a Credit Manager, I believe you must always keep yourself and your staff educated in a constantly changing environment. I personally attend the CreditScape events, as well as other seminars and webinars throughout the year, as investing time in education is very valuable to my company and team.

When I get a new credit application, I immediately go to CMA’s Anscers.com website to obtain RFIs from other CMA members, which in my opinion is the best trade reference you can get. I participate in my industry credit group by reporting past-due accounts, NSF checks or bankruptcies, which is very helpful to all Credit Managers, and I read the reports to see if I recognize any of the late-payers company names from accounts my company may have sold. I submit my full aging data automatically through anscers.com as well so that I don’t have to upload them manually for the Group discussions. The hour a month that I spend attending Group meetings is possibly the best use of my time all month.

Through CMA I also run credit reports designed for my company and volume, and get better rates than I would have if I’d have gone direct.

Finally, as a company whose primary business is in the construction industry, CMA’s construction forms filing service has helped my short-staffed team to verify the information provided as well as produce the preliminary notice, and mail them out, allowing me to spend more time collecting.
CMA allows you to have the most valuable networking a credit professional could ask for, which is why I chose to serve on the Board of Directors, as well as other volunteer opportunities within the association. CMA and its staff are always there for me and have contributed to me being the credit professional that I am today. For that, I AM CMA.

I am always playing around with CMA’s mission statement. While it is seems impossible to fully capture everything that CMA does to support credit professionals and their teams, the above mission statement is true if not fully comprehensive. One of the ways that CMA can make difference and help credit professionals perform at a higher level is through education and training. For years we have offered credit education on the entire range of credit-related topics in a variety of different formats (seminars, webinars, in-person and online classes, summits, and conferences). In an effort to keep up with the changing (and increasing) demands of the credit function, we surveyed our Board of Directors to find out what core knowledge and skills are required for hiring, performance evaluation, and advancement within the credit department.

What we found was pain.

A dozen in-depth interviews uncovered a dozen core skills that are valued by most of their credit departments. CMA has traditionally focused on providing “education,” meaning general knowledge, on credit topics. The Association has not focused on “training,” which is the practical application of that knowledge to daily credit operations. Training has been left up to the member company to offer. A few Directors we talked with have in-house training resources (often referred to as the Company University), and a few others have support from their human resources departments, but the vast majority of member companies make all credit-specific training the sole responsibility of the credit department management. The pain comes from the often significant time, resources, and expertise that is required to take on that responsibility. Time, resources, and expertise that an already overburdened credit department does not have.

At CMA, we are in the process of trying to ease that pain by developing convenient, cost-effective, standardized training programs that can be used to train credit department personnel at all levels of experience and responsibility. Your volunteer leaders on the Board have given us a really good start, but we want to hear from all of our members about what core skills your company and your credit department values and believes will drive high performance and great results. Please take a few minutes to answer our brief one-page survey so that we can include your input in our program design.

Congratulations to Josh Poli, CBF, of Intsel Steel West and Nannette Bringard, CBA, of Breakthru Beverage, who were named CMA Students of the Year at the recent CreditScape Summit and Annual Meeting.

Nannette Bringard of Breakthru Beverage, who received the CBA Designation of Excellence, has been in the credit industry for 25+ years, where she has served on a number of boards and committees for CMA. She encourages those around her to participate freely in credit industry meetings and to reach beyond their goals for success.

Josh Poli, CBF, from Intsel Steel West, who received the CBF Designation of Excellence, has been described as someone who goes above and beyond to support his company and his customers. His desire to learn more has been key to his success, and he frequently attends seminars, webinars and other educational events to expand his professional knowledge. His co-workers have been very appreciative to what he’s brought to the table.

Christopher Ng, esq., a partner of Gibbs Giden Locher Turner Senet & Wittbrodt LLP was named CMA Educator of the Year at the recent CreditScape Spring Summit and Annual Meeting. For those who know Mr. Ng, he is the consummate volunteer, instrumental in helping CMA members learn more about their rights and remedies. He has not only spoken at CreditScape, but he has also done numerous seminars and training sessions at customer locations. What’s possibly most impressive about Christopher is his thorough follow up with all attendees after his sessions, reaching out to CMA members to make sure they understood the topic and answering any questions they might have.

Congratulations to Christopher, and our members (and us too!) are extremely grateful for your dedication and assistance.

CMA Mentor of the Year Alvin Moreno, MBA, of Nestle USA, has 30 years of extensive experience in the credit industry. He has three masters degrees and a six sigma green belt. He is passionate about using sound credit and risk management principals to reduce risk. He is always willing to guide his team and those around him to grow and recognize their potential. Under his leadership, CMA created the Supplier Risk Management Industry Credit Group over the past year, and the group has been successful as the first best-practices group CMA has ever offered.

Congratulations again to our winner, and we appreciate all that you do for CMA and its members.

Joe Lucas, representative from CMA 2016 Innovative Company of the Year SRS Distributing

It is important for CMA member companies to grow and be creative. Finding ways to bridge the gap between credit and sales or the competition is key to success. This year, CMA created an award to honor innovation in the credit management profession.

Joe Lucas, and his company SRS Distributing, created an application to assist his sales team in prospecting new accounts while out in the field. Joe is also a volunteer for CMA, and has recently been named to its Board of Directors. It is our honor to award the first CMA Innovative Member of the Year to SRS and Joe Lucas for creating the “prospector app.”

Tracy Rosenbach, Financial Services Manager for Silgan Containers, has been named 2016 CMA Credit Executive of the Year, at a ceremony which took place at the recent CreditScape Spring Summit and Annual Meeting, Powered by United TranzActions. This award is given to the credit professional who stands above others, who is willing to help out at any moment, which defines Tracy’s role with CMA. She has been in credit for over 18 years, has served on the CMA board for 7 years and is the incoming chairperson. Additionally, she is Chair of the Membership Task Force, whose mission is to work with CMA staff to create meaningful services for members, and actively participates for the good of all of CMA’s members. Professionally, she has also been successful in obtaining her CCE certification and who is engaged in many functions for CMA and NACM.

Congratulations to Tracy Rosenbach, and we look forward to a great year with you as the new Chair.

What a year it has been and I can’t believe how fast the time went by…

I was so happy to see the turnout to CMA’s Spring CreditScape this past week. Thank you to those people who were able to attend. If you weren’t able to make it in March, please make sure you attend the Fall CreditScape as I believe it will be worth your time.

I have been truly honored and humbled to serve as the Chairman of the Board of Directors this last year for CMA. I would like to personally say “thank you” to the following people…Mike Mitchell, Kim Lamberty of CMA for their trust and guidance. To Tracy Rosenbach, Jim Morrow, Melissa Kobus the Executive Team, thank you for your leadership and support this last year…it was really appreciated. And to the rest of the Board Members, I would like to show my sincere gratitude for your endless efforts, your committee service, and your ideas presented last year. Thank you!

And last but not least…all of the CMA employees for their support to the Board throughout our service.

I would like to take a minute and point out some of CMA’s accomplishments over the past year:

CMA launched the Fall and Spring CreditScapes – Which focused on a 360-degree look at one particular topic to give it a much more interactive and more focused educational program.

CMA launched the Supplier Risk Group – Which looks at how to evaluate your suppliers to help you manage a different type of risk, one that could be more important that if any one customer doesn’t pay.

The Construction Credit Report was launched as a partnership with Ansonia Credit Data. The report provides information needed to make decisions based on a construction project.

CMA Adjustments (formerly CMA Adjustment Bureau) – received new branding and a new logo to better portray its 133 years in business.

CMA recently moved its offices from Burbank to Glendale, modernizing its workspace.

New Designees earned over last year: 5 CBAs, 1 CBF, and 2 CCEs.

It’s been really exciting to help move our Credit Association forward in a positive direction this year. Please continue to support CMA and our incoming Chair Tracy Rosenbach to increase our membership, improve existing services, add new services, and help CMA continue to be the best Association we all deserve. Let me know your thoughts. I’d love to hear your feedback.

Michael W. Fenner, CBA, is the Credit Management Association Chairman and Manager of Corporate Credit Operations for Beacon Roofing Supply, Inc. He can be reached at 714-321-8187, or mfenner@becn.com.

The CreditScape Spring Summit and Annual Meeting, Powered by United TranzActions, an interactive learning seminar and workshop which took place March 24-25 at the Island Hotel Newport Beach, was a huge success, according to preliminary survey results that were tabulated after the event.

With the common theme of “the elements of an efficient digital credit department,” attendees commented that the sessions gave them insights on how to approach their superiors to update their credit departments, help with evaluating vendors, and how to take their credit applications digital. They also overwhelmingly liked the panel discussions led by their peers who have implemented the technology, and their success (and failure) stories in implementing it.

Said one sponsor: “The audience at CreditScape was the most intelligent one we’ve seen at an event. Lots of great questions were asked, and we feel the attendees got a lot out of it. I can’t wait to participate in the next one.”

Mike Puccinelli of Equinix addresses the crowd at the opening session of the Spring 2016 CreditScape.

Additionally, every person who submitted a survey said they’d recommend CreditScape to a colleague.

Plans are already underway for a 2016 Fall CreditScape, September 22-23, 2016 in Sonoma, Calif. Details about the event are forthcoming.

The March CMA Member of the Month is a company which benefits by simply utilizing the services that CMA offers.

EMJ Metals has been an active A/R information contributor, and its staff are genuinely great to work and speak with. EMJ also uses CMA’s reports and other CMA services.

EMJ Metals is one of CMA’s longest standing members, and we appreciate the relationship that CMA has with David Schulten and his team. On behalf of CMA, we thank EMJ for its participation, and we look forward to their continued support.

Companies like EMJ who submit their full aging get 25 free B2B NACM National Trade Credit Reports (and discounts on additional reports), the ability to support their good customers (and report their bad ones), time and money savings by not having to respond online to RFIs or Group worksheets – their trade data is automatically added by anscers, assistance in strengthening the CMA & NACM Databases, and more. The members who tell us that they get the most out of CMA are the ones who actively participate and contribute.

Members of the Month are nominated by CMA members, Group members, volunteers and CMA staff to highlight those members (or member companies) whose engagement with CMA has helped improve the overall credit profession for others.

For more information on how you can participate in any of the areas mentioned within this article, or to nominate any members for this honor, contact Diana Escobar at descobar@emailcma.org or 818-972-5300.

CMA is proud to host the CreditScape Spring Summit 2016 next week in Newport Beach, with a significant focus on how technology can be leveraged to improve the efficiency and effectiveness of credit operations. Regardless of whether you are attending the event, we’d like to get a baseline for how much automation is being utilized across our member base today.

Click here for a short survey that will ask you about your challenges, where you are with automation and where you’d like to be. We’ve also got several questions about the time spent and value of some of the most common activities in the credit department. By helping us to better understand your challenges regarding automation and technology, we’ll be better able to craft conferences, webinars and presentations, and even alliances with technology providers, throughout the year that help support your goals.

We’ll be asking these same questions on a periodic basis to see how quickly our membership is adopting technology. We’ll also want to understand how else we can support your needs in this area and how well our efforts result in concrete improvements and reduction of manual labor at the member level.

The results of this survey are only available to CreditScape attendees and those who complete it – so please take a few minutes to tell us about your process. We’ll discuss the results at CreditScape next week!

We are just barely into the year 2016 and already I am hearing excuses as to why the credit manager cannot attend the industry credit group meetings to which they belong. They range from the receptionist is out to my controller wants me to stay and call customers.

Attending credit meetings provide your best Return on Investment by reducing bad debt loss, identifying slow paying accounts, and lowering your financial dependence on credit reports I contend that blindly calling a number in your system is more time consuming and less efficient.

Calling for dollars requires preparation

Are you calling a specific person or a/p?

Who is the person who controls the checkbook?

Is there a gatekeeper blocking you?

Have you previously left voicemails?

Who does that person report to?

How often do they cut checks?

Are there orders in house or on hold?

A good group can identify numbers 1, 2 and 5 & 6. And supply a direct extension to avoid # 3. Number 4 tells you how important you are to them and you know #7.

I say it every month. Group Meetings are not social events for the credit manager, they are an attempt to maximize your company’s revenue. If you bring the names of past-due accounts that you will be calling for money to a meeting, I guarantee you that the information you receive will increase your percentage of recovery significantly.

You are now ready to call for dollars. You have all the facts you need and this should be resolved in one call. Feel free to contact me at lconvoy@emailcma.org if you’re not in a group and I’ll help you identify one that might be a good fit for you.

We look forward to bringing you the same high standards of customer service and handling of all your risk management needs from our new location later this month.
If you have any questions, please let us know.

Year after year, as we go through our careers, we are always looking for ways to improve ourselves and advance in our professions. I know for me, I got complacent with my job and quite frankly I didn’t know where to go and or who to turn to. My luck changed when I ran into Mike Mitchell, CAE President of CMA at the Las Vegas airport in 2008 after attending a Western Region Credit Conference. I mentioned to him that I was looking for more in my career and he said to me, “You are already being considered.” I wasn’t entirely sure what he meant by that at that moment, but shortly thereafter I received a phone call to join CMA’s Board of Directors. I thought it was a great opportunity to be able to volunteer and help our association, understand more about how a business works, as well as work with my peers from all different companies and credit backgrounds. The rest is history…

Let’s take a look at some of the platforms that have assisted me through my career:

Professional Credit Certification – It’s never too late to get your designation or move to the next level. Here are the available designations.

Credit Business Associate (CBA) – This includes three credit courses basic financial accounting, business credit principles and introduction to financial statement analysis.

Credit Business Fellow (CBF) – The lessons include business law and credit law.

Certified Credit Executive (CCE) – You must be proficient at accounting, finance, domestic and international credit concepts, management and law.

Professional Development Programs – CMA offers a variety of courses in person and online. The anscers.com website (on the education tab) is constantly being updated with the latest information for all of us. As an example some of our options today include (but not limited to) the Spring and Fall CreditScape Summits, NACM’s annual Credit Congress, numerous lien law seminars in many states, a course on alternative for financing the sale of goods, and credit risk and risk mitigation techniques. Please go check them out and see which one can assist you in your career.

Board and Committee Service – By volunteering my time on the CMA Board of Directors and serving on board committees it has allowed me to grow as a person and become a more of a diverse credit manager and move up in my career. I have been able to make lifelong friends as well as expand my credit knowledge to move forward in my field just by participating in discussions and working with my associates.

Industry Credit Groups (ICG’s) – My ICG helped assist me in my credit decision process to run a more thorough credit department. Currently we have 60 diverse groups. They network with each other, share factual information timely, and you get responses promptly from your group members so you can make educated decisions with your new accounts and or your current A/R. Feel free to contact Diana Escobar directly at (818) 972-5342 for more information about groups that pertain to your industry.

We all know how important it is to stay up-to-date with our education. And finding the time to go to events or take classes can be a challenge. Things won’t change unless we change them. Invest in yourself and your teams, and challenge them to improve and grow.

Make sure you encourage your teams to support CMA which is your association. It is important to always network with your colleagues and make some new friends as you go through this process. Make sure you always bring back your experiences to incorporate them into your jobs.

Let me know your thoughts. I’d love to hear your feedback.

Michael W. Fenner, CBA, is the Credit Management Association Chairman and Manager of Corporate Credit Operations for Beacon Roofing Supply, Inc. He can be reached at 714-321-8187, or mfenner@becn.com.

Companies cannot ignore the fact that there is a whole world out there to sell to, and despite thct that current global economic conditions do not favor U.S. exports, there are tremendous opportunities for companies that can and have figured out how to sell to foreign markets on favorable terms. Global commerce is more than a trend – it is a certainty, and because export sales require the support of the credit operation, CMA will continue to include international credit in all education and training programs.

In an effort to determine how far CMA should go to support international credit sales, I have recently attended events that focused on the broader topic of exporting and events that addressed specific credit issues related to international sales. Here are a few things I’ve learned so far.

Most emerging markets are outside the U.S. Middle class growth and urbanization is taking place in China, India, and throughout Asia, not in the U.S. It is estimated that the global middle class will triple in size to 4.9 billion people by 2050, and they will spend an estimated $56 trillion by 2030. Two-thirds of that spending will come from emerging markets. This will create not only a huge opportunity for growth, but may put a demand on U.S. companies to sell into emerging markets just to stay competitive and not get left behind.

A surprising number of exporters are small and medium-sized enterprises (just like most of our members), and new free-trade agreements, like the Trans-Pacific Partnership (TTP), are giving SMEs greater access to emerging markets.

There are a surprising number of Federal and State agencies that provide free and low-cost assistance for exporters. U.S. Department of Commerce Commercial Services, Small Business Administration, Small Business Development Centers, Export Assistance Centers, the newly reauthorized EXIM Bank, and a vast network of partner programs are there to help your company export. The challenge is that there is overlap among these agencies and the overwhelming number of resources can be difficult to navigate. CMA has established strategic partnerships with the International Trade Administration (U.S. DOC), the SBA in Glendale, CA, and the EXIM Bank to better understand how to bring these resources to our members that currently export or plan to in the near future.

Due to the cost of Letters of Credit to foreign buyers, more international sales are shifting to open credit terms, which decreases barriers to sales but increases the risk. At CMA’s upcoming CreditScape Spring Summit and Annual Meeting, a panel of seasoned international credit managers will discuss why overseas customers are demanding more credit in 2016, tools for evaluating the creditworthiness of foreign companies, when to (or not to) extend higher credit limits or longer terms, what are the real risks today of giving payment terms abroad, and companywide credit strategies for growing international sales.

If your company already sells outside the U.S. and your credit department already has a solid process in place for managing trade risk, then much if not all of what I’ve said is not news to you. However, my guess is that many of you have little to no experience exporting, and chances are that if your company produces a product that is marketable to other countries, you will be asked to provide support for international sales. The question is, how can CMA help you find the knowledge, information, services, and professional training to ensure you are ready to take on the challenges of global commerce? As we continue to explore trends in international sales, let us know how CMA can offer assistance to your company to help you win in the global marketplace.

An active participant in an Industry Credit Group is someone who attends meetings, shares best practices for the good of those in the group, submits their reports and gets useful information out of the meetings that they can take back to the office and make informed business decisions based on that information. Active participation is contagious, and the folks who tell us that they get the most out of the meetings are the ones who actively participate.

The February CMA Member of the Month is someone who personifies the term “ACTIVE PARTICIPANT,” whose involvement inspires others to continue to contribute to the Groups as well as the other educational offerings from CMA.

An active member of the Northern California Electric Group, Alexis Scott, CBF, of Maltby Electric has been active in the Group for more than six years.

She takes it upon herself to mentor others in the group, commonly sharing best practices with the Group whenever appropriate. In fact, several from that group approached CMA staff privately to commend her for doing that.

Alexis uses CMA’s construction forms filing services and other CMA services, and is a strong advocate for CMA’s educational programs and services, as she is a huge supporter of CMA.

On behalf of CMA, we thank Alexis for her participation, and we look forward to her continued support.

Members of the Month are nominated by CMA members, Group members, volunteers and CMA staff to highlight those members (or member companies) whose engagement with CMA has helped improve the overall credit profession for others.

For more information on how you can participate in any of the areas mentioned within this article, or to nominate any members for this honor, contact Diana Escobar at descobar@emailcma.org or 818-972-5300.

Yesterday I mentioned that I’d be listing several technologies I use that make my job easier. These are all things that I don’t have to call the I.T. department to install for me. These tech tools are easy to learn, easy to use, super helpful in the credit and collection department, make you look good, and best of all, are FREE!

Free Conference Call/Webinar/Video Chat tool
Free Conference Call.comwww.freeconferencecall.com
Yes – it really is free! You get assigned a phone number and code that is static and is yours to use whenever you need to have a conference call. You can even do free webinars (and record them) with all the standard tools that pricey tools like WebEx offer. Now they even offer video chat!

Free Online Large File Management Tool
Dropboxwww.dropbox.com
Large files are often rejected, or never make it out of your own server. Dropbox solves this issue by allowing you to convert any document into a link that is easily shared and can be password protected. You can store or send pictures, PowerPoint’s, excel files, etc. This product comes with a basic level of storage than can be incrementally increased through a variety of actions.

TheCreditApplication.com
eMagia Software
www.thecreditapplication.com
Another great new product from our friends at Emagia that provides you with an online credit application that you customize – for FREE! You re-create your credit app online, no tech support from your company necessary. You can export data into excel or your ERP, it is integrated with credit sources like the NACM National Trade Credit Report and even Yahoo financials.

Low-to-No-Cost Productivity Tools
Your Nerdy Best Friendwww.yournerdybestfriend.com
If you missed seeing Beth Ziesenis, known as “Your Nerdy Best Friend,” at last year’s Western Region conference in Portland, you don’t want to miss seeing her at Credit Congress. Visit her site to get comprehensive reviews on super productivity tools that touch virtually every area of your department. You are sure to find something that will change your life – personally and professionally.

Multi-Bureau anscersX Commercial Credit Report
CMAwww.anscers.com
Ok, this one isn’t really free, but it is one of the easiest and most cost effective ways to get data from the leading commercial credit bureaus all in one place. The AnscersX report provided by CMA, gives you the greatest hits from D&B, Experian and Equifax all in one easy to read report. No contracts, no minimums, no hassle.

Use anyone of these tools and you’ve got some instant sizzle. You instantly up your professionalism and your image. All of these tools have impressive graphical reporting features to help you share the results with your boss, making you and your team, look great. The key is to take one step at a time, start with simple low- or no-cost options for some of the most basic productivity tools, and generate some good looking reports that tell a story. Just pick one and sign up. Didn’t see one that floats your boat? There are hundreds of these types of tools, and just starting with one and seeing immediate real success – the sizzle- is what you need to keep going. Track me down at CreditScape and I’ll give you a live demo of how easy these tools are and how they may your life easier and make you look sharp.

Ok, we get it. You’re busy, overworked, underpaid. And probably under-valued. If that is your reality, and your perception, it’s time to take action to change it. We know it is hard to get out of the office, but if you’re not viewed by management as you’d really like to be, take the time, learn a few new tricks. Generate some sizzle. See you at CreditScape!

CreditScape
This is just a surface view of one of the topics that will be discussed in detail at the upcoming CreditScape Summit and Annual Meeting in Newport Beach, CA on March 24-25, 2016. Come to CreditScape, learn from experts and peers who have done this, share you own experiences with others. For more information, visit www.CreditScapeConference.com.

Michelle Herman is a business development manager at NACM. She will also be moderating several of the panel discussions and workshops at CreditScape.

Why is it that credit, especially commercial credit, always seems to get the short end of the stick when it comes to resources? Why does it seem just the opposite for sales and marketing? Why do they always get the newest equipment, the coolest gadgets, the fancy business cards, even the latest version of Microsoft office before you? Why? It’s because those folks are externally facing representatives of your company and your company already knows the value of their efforts. Huge marketing campaigns cost huge dollars and are visible inside and outside of the company. Huge sales get noticed and celebrated – and commissioned. These teams may annoy the heck out of you, but they have a few things figured out: get noticed = be valued. They are constantly throwing out the sizzle – and people notice sizzle, all the time.

So why can’t credit sizzle? Why are we always in the back room? Why are our requests and projects always “on the list”? Why doesn’t anyone else get excited that your 90+ bucket just dropped below x percent? At this point, my only conclusion is this: Perception really is reality. If you have everything you need in your department, you can save ten minutes and stop reading this now. If you are still struggling to get basic tools and funding for training and attending conferences, read on.

For every person in your company who has nothing to do with (or knows nothing about) credit or collections, their PERCEPTION about what you and your team do or don’t do, their stereotypes, biases, and assumptions, really is their REALITY. How you and your team are perceived, almost more than how you actually perform, is how you are valued, whether you like it or not. And they will support you only to the extent that they think you are valuable.

We all know, none of us ever planned to get here, it just happened. Many never even heard of commercial credit until we were suddenly knee deep in it. Clearly, as an industry and a profession, we’ve got some work to do, but we’ll save that for another day. The point is, no one really knows what you do, and it is your job to educate them, to prove your value – but take some notes from those flashy sales folks, sometimes you need a little sizzle to do it!

So how do you sizzle? How do you prove your value? How do you get a seat at the table? How do you get to be seen as a strategic player, not just an administrative cost center? How do you really change their perception? You must start by changing your reality, and you can do it starting today, through technology, without spending a dime.

If you are still reading, I’m going to assume that you’d like to improve a few things. Many in our industry have been around a long time, and have heard “no” so often, that they just stop asking, and they stop learning. I’m still amazed at what isn’t being implemented in our member’s offices and even in our own NACM offices, because we haven’t taken time to find out what’s out there. We did a short survey at one of the regional conferences about why technology isn’t adopted more often.
Reason Number 1: No Time. No one takes the time to investigate the technology, because they have no time. They have no time, because they have no technology. It is a vicious and evil cycle. Result: no sizzle, no value, no tools.

Reason Number 2: No Budget. This really shouldn’t be an excuse anymore as so many services are offering their basic tool for free, only charging if you want to upgrade. It is a great business model that lets folks like us actually explore things, test it out, kick the tires – before we commit, or spend a dime. And they are all web-based – nothing to install, no tech involvement needed, just go to a website and register.

Tomorrow, I’ll list a few of my favorite tech tools that are easy to learn, easy to use, super helpful in the credit and collection department, make you look good, and best of all, are FREE!

CreditScape
This is just a surface view of one of the topics that will be discussed in detail at the upcoming CreditScape Summit and Annual Meeting in Newport Beach, CA on March 24-25, 2016. Come to CreditScape, learn from experts and peers who have done this, share you own experiences with others. For more information, visit www.CreditScapeConference.com.

Michelle Herman is a business development manager at NACM. She will also be moderating several of the panel discussions and workshops at CreditScape.

Define the Project Purpose and Scope? It is Not all about the Technology

Any software or automation improvement addresses defined business objectives that impact multiple areas within the company. In order to pull off these changes effectively all stakeholders affected should be aware of and involved in the coming changes. Depending on the project and the company, the target audience may differ. As an example: You can’t consider changes in credit and collection software without involving such areas as sales, customer service/order administration, project managers, operations and IT, while keeping senior management informed. Every project has a defined mission that requires cross-functional buy in. Realistic objectives and timelines have to be agreed to. Roles have to be defined.

This takes planning and cross-functional communication. If you are heading the implementation team you will need a clear vision on how the changes will support company goals and performance expectations. Processes, policies and procedures may need changes and streamlining to best leverage the new tools.

Ready Fire Aim… Don’t get bogged down with long term major system implementations. They are hopes and dreams.

A solution provider will have to be vetted that meets your company’s requirements. This will involve a well thought out selection process where both you and the provider understand each other’s business needs, strengths and weaknesses. You will need a basis for your selection. Try to make this as objective as possible, looking at each potential provider with the same criteria. A well rounded score card that lists and weights your critical needs. The selection process should provide all the stakeholders involved an opportunity to participate. If you get buy in at this stage, there will be much less push back later.

No system is perfect or addresses all the needs of all the users. Often it is best to reduce expectations in order to actually get the basics in a reasonable time-frame. Credit and collections are tactical issues: The needs are immediate and have to be addressed today. Complex ERP implementations are strategic in nature. By the time the specialized needs of a Credit Manager are addressed, too much time is lost, the department fails to gain efficiency and results have not improved.

Making the Choice Between an ERP and a Specialized Solution

ERP solutions are robust and have many company-wide advantages. They are also complex, expensive and have long implementation cycles. Let’s face facts. Credit Departments typically have fewer headcount that other areas supported by an ERP. The value in spending research and development dollars for a minimal number of users isn’t in the cards.

Companies specializing in credit and collection software, billing automation, document management and cash administration, address the issues you are trying to resolve on a full-time basis. Credit and collections is not an after-thought, it is their market and revenue stream. They continually focus on user needs and spend R&D dollars to improve their product. Many have user groups you can participate in, that have a real impact on the next release. Implementations are easier and of shorter duration. Cloud based solutions require minimal use of your internal IT resources. Costs are surprisingly low.

Many are faced with this obstacle, “Oh we are putting in or upgrading our ERP next year. It will do fine for you. We don’t want to do any other projects in this area until after the ERP is up and running. We are going to implement the ERP straight vanilla. Anything you need will be in Phase 2 (i.e.: Never)” If that is the case, push hard for incremental improvements and results in a relatively short time-frame.

A Credit Manager has a strong position. You should illustrate a good return on the investment. Show how other departments and most importantly, your customers will benefit. An interim fix with a decent ROI will pay for itself before the ERP initiative is complete.

When the day comes and the ERP vs an interim solution is looming, do a gap analysis between the interim solution and the ERP. You are likely to be surprised by what you already have.

At the upcoming CreditScape Summit and Annual Meeting, you will be able to discuss how to choose a solution provider. Expert Panelists will give you insight on their experiences, victories and losses. You will have ample time to ask questions and network with others who are, or who have faced, the same technology challenges you have. This is definitely a good use of your time.

CreditScapeThis is just a surface view of what it takes to convince management an automation initiative should be approved. Each of these points and more will be discussed in-depth at the upcoming CreditScape meeting in Newport Beach, CA on March 24-25 2016. Come to CreditScape, learn from experts and peers who have done this, share you own experiences with others. For more information, visit www.CreditScapeConference.com.

Robert S. Shultz is a Partner at Quote to Cash Solutions (Q2C) LLC. He will also be moderating several of the panel discussions and workshops at CreditScape.

In today’s rough and tumble business environment the need for expense management, working capital and liquidity are key CEO and CFO concerns. Gone are the days of ready access to financing and smooth collection of accounts receivables. Timely management information must be available showing how the business is doing and where the opportunities for improvement are. More than ever companies must increase the productivity of limited order to cash management and staff. All this must be delivered with maximum customer service and satisfaction.

Companies must be able to extend credit intelligently, generate accurate and timely invoices, and quickly identify and correct customer disputes. Management needs to track performance metrics, trends and customer issues. Companies that do these things well are in a position to shorten their overall cash conversion cycle, reduce the need for borrowing and bring a company the liquidity it needs to survive and thrive.

There are many cost effective automation solutions in the marketplace focused on these issues. Many of these are cloud based. This simplifies implementation and few internal IT resources are needed. Even though the costs are relatively low, the functionality is amazing. Credit and other financial managers will find that the first hurdle is to convince management the suggested solution meets the acid test. They have to answer the question, “Show me the Return on Investment” (ROI).

Where to Start
The first step for a credit manager is to determine when volumes and performance challenges justify automation and the expense of a solution. The solution could be developed internally or acquired from a third party provider. The cost and likelihood of success with an internal option really depends on the resources available in the company.

Following are ten things to consider that fit any automation initiative. The following is not intended to be a complete list. It covers the key points you may include in a recommendation to senior management.

How would you answer the following question: What are the Compelling Needs for Automation?

In order to convince management to invest in any automation you must demonstrate the need in clear, real world and understandable terms. Here are ten things to consider:

Is excessive overtime a routine in the department? Are you using temps to supplement permanent staff?

If you benchmark Full Time Equivalents (FTEs) transaction volume is yours is low by comparison?

Is your company growing, merging or acquiring but you are not able to hire additional staff for your department?

Is Sales continually upset that credit reviews take too long? Is business lost as a result?

Are collection results below expectations?

Is your department stuck in a morass of unworked deductions?

Are invoices often inaccurate or go out late?

Are Sales and Customers impacted by order hold and release delays?

Is management unsatisfied with performance measurements, reporting and the ability to status Customer balances?

Is it impossible to accurately forecast cash flow?

As you can see if any or all of these factors are in play you will get the attention of your management with opportunities for significant improvements.

Where is the Money!
Soft savings such as process efficiency or improved customer service can help justify expenditures for automation. Actual hard cost savings will enable you to calculate the “ROI” and how long it will take to get there.

You should consider such things as:

An increase in transactions per FTE will reduce the need for overtime, temps or permanent staff.

Based on forecasted company and transaction growth automation will reduce the need to add staff.

Automation of the credit approval and review process will speed decisions, avoid lost business and could reduce past dues and write-offs.

Increased collection efficiency will bring in cash earlier, reducing borrowing costs, enabling the company to take all Accounts Payable discounts, provide working capital to invest in profitable opportunities.

This is just a surface view of what it takes to convince management an automation initiative should be approved. Each of these points and more will be discussed in-depth at the upcoming CreditScape Summit and Annual meeting in Newport Beach, CA on March 24-25 2016. Come to CreditScape, learn from experts and peers who have done this, share you own experiences with others. For more information, visit www.CreditScapeConference.com.

Robert S. Shultz is a Partner at Quote to Cash Solutions (Q2C) LLC. He will also be moderating several of the panel discussions and workshops at CreditScape.

These are interesting and challenging times. With the digital revolution, many process improvements have completely changed the way business is done. There is so much more information available now than ever before in assigning business credit that it is difficult to stay up on the latest trends and best practices to make sure that your department (and you!) are doing things as efficiently as possible with the available tools.

At CMA, we’ve had numerous conversations and phone calls from members who tell us that they are trying to do more with less, or that their departments have been downsized. As a response to those conversations, CMA has created an event that is designed to help credit managers with all levels of experience and expertise to leverage the knowledge and experiences of practitioners who have implemented elements of an efficient digital credit department, with a complete 360-degree overview of why, when and how to implement those elements to make your department run more efficiently.

The 2016 CreditScape Spring Summit and Annual Meeting, powered by United TranzActions, will feature two days of workshop training, expert practical and legal advice, and networking with other credit professionals. The goal of CreditScape is to provide an opportunity for credit practitioners at all levels of experience and expertise to come together to solve problems and provide solutions for their real-world issues they face at work.

Next week, two of our panel moderators for the event, Robert Shultz and Michelle Herman, will be guest blogging about the reasons why you need to at least consider implementing the elements of the digital credit department, but specifically the WHY, WHEN and HOW to implement, including how to justify the need to your management, select a third-party vendor, the types of problems that digital applications can solve, and more.

We invite you to join Robert and Michelle at the Spring CreditScape Summit and Annual Meeting, March 24-25, 2016 at the Island Hotel in Newport Beach (or view the website at www.creditscapeconference.com) , and to read their blogs, as the information you’ll receive can help you save time and resources in the long run.

What elements of the digital credit department are you the most interested in learning about? We welcome your feedback.

Now that we have all made our “New Years resolutions,” make sure you don’t drop the ball on your professional goals. Maybe you would like to improve your own personal skill set in your organization. Or perhaps you want your team to get up-to-date with the latest credit training / information in the market place. For me, as I move through this New Year, I look at budget planning and ideas on how to improve our credit department. I urge you to please take some time to review the latest CMA CreditScape Spring Summit information. By attending the two days of workshop training, I believe that it will propel you and your department to the next level.

What will be covered this spring…“The Efficient Digital Credit Department”.

Let’s take a look at some of the items that stood out to me:

All Levels of Expertise Welcome – Good for beginners to experts in your departments.

The discussions are led by practitioners, not marketing people – Get a 360-degree look into the elements of an efficient digital credit department, focusing on best practices and real-world case studies with the best and brightest practitioners in credit and collections, including top credit executives from companies such as Sony Entertainment, Sysco Foods, Ganahl Lumber, Kendall-Jackson, Walters Wholesale, UTA/United TranzActions, the U.S. Department of Commerce and Watsco.

We all know how it is important to stay up-to-date with our education. And finding the time to go to these events can be hard too. Invest in your team, and challenge them to improve and grow. This program will be packed with information and has many excellent speakers too. I would highly recommend it.

Make sure you encourage your teams, support CMA…your association, and network with old friends and make some new ones too. Team up with your colleagues and learn together. Then bring back your experiences to incorporate into your jobs. Let me know your thoughts. I’d love to hear your feedback.

Michael W. Fenner, CBA, is the Credit Management Association Chairman and Manager of Corporate Credit Operations for Beacon Roofing Supply. He can be reached at 714-321-8187, or mfenner@becn.com.

CMA Event to Offer 360-Degree Overview of the Elements of an Efficient Digital Credit Department, March 24-25, 2016.

BURBANK, CA (January 21, 2016)–Credit Management Association (CMA) is collaborating with payment processing solutions partner United TranzActions (UTA) to educate credit professionals with a complete overview of the elements that make up an efficient digital credit department. The CreditScape Spring Summit and Annual Meeting, powered by UTA, takes place March 24-25, 2016 at the Island Hotel in Newport Beach, and features two days of workshop training, expert practical and legal advice, and networking with other credit professionals over the common theme of implementing automation tools and third-party services to increase the overall efficiency and performance of the credit operation.

“We received overwhelmingly positive feedback from participants at our inaugural CreditScape event last fall. Members and other participants told us that they really benefitted from the real-world case studies and practitioners who shared their experiences through panel discussions and workshops. Attendees also appreciated having vendors and sponsors included in problem-solving discussions. Sustainable learning is about shared knowledge and experiences, and this is one way that CreditScape Summits will keep participants ahead of the curve in an ever-changing credit landscape. This will also be much more interactive than the typical teacher-and-classroom experience our audience is used to. For those who are used to staring at their phones and checking email during these types of events, then CreditScape is not for you,” said CMA President and CEO Mike Mitchell.

“In conversations I’ve personally had with members, we believe that it’s not just about finding the right solution provider, but instead determining the diagnosis and solution to efficiency problems. With the help of some of our technology partners, including payment processing solution provider UTA, we’ve developed a program geared towards all sizes of credit departments. Our expert panels will take attendees through the entire life-cycle of process improvement, from identifying credit functions that can be improved through automation and/or outsourcing, to determining and implementing the right solution, to measuring results to determine success. Stay current on best practices and hear from practitioners who have successfully implemented electronic credit applications, A/R automations, business intelligence and other elements of the digital credit department,” Mitchell added.

“Preliminary discussions with CMA members and industry partners have uncovered various capabilities and core competencies that affect credit department efficiency, including automation tools, the quality of customer investigations and evaluations, building relationships with customers and sales, and differentiated collection approaches for large and small debtors.”

“Among the topics to be addressed at the Summit are automating the customer onboarding process, vetting your customers, automating your A/R management process, international resources and government automation tools, emerging technologies that may impact the credit department, and more. The program has a strong group of discussion-leader practitioners from leading companies such as Sony Entertainment, Equinix, Sysco Foods, Ganahl Lumber, Kendall-Jackson, Walters Wholesale, Watsco, SRS Distribution, UTA/United TranzActions, and the U.S. Department of Commerce. These are some of the subjects and practitioners that will drive content and discussion at CreditScape,” Mitchell said.

In addition to the educational program, CMA will also hold its Annual Meeting, which will include the installation of the 2016-2017 CMA Board of Directors, plus the presentation of awards for Credit Executive of the Year, Mentor of the Year and Student of the Year. The Annual Meeting will take place during lunch on March 25.

The event will be preceded by the Credit Executives Symposium on March 23 at the Island Hotel. The one-day event for CFOs and Credit Directors, offers high-level interactive discussions and workshops on the hottest topics in credit management. CreditScape Summits are offered in the Fall and in the Spring, focusing on different aspects of the Credit Management landscape. It is one in a series of in-person educational opportunities offered by Credit Management Association. To learn more about the other sessions and topics, visit www.creditmanagementassociation.org/events or call 800-541-2622.
About Credit Management Association

Credit Management Association (CMA), which was founded in 1883, is a Burbank, Calif.-headquartered trade association with approximately 1,100 member companies representing over 200 different business categories selling regionally, nationally and internationally. CMA focuses on providing products and services that allow companies to make informed business decisions based on trade credit. CMA is one of the largest affiliates of the National Association of Credit Management (NACM), whose 33 affiliates serve all of North America. For more information, call 800-541-2622, or visit www.creditmanagementassociation.org.

CMA, along with the members of the Southern California Electric Group, would like to extend warmest wishes to longtime group member Jim Morrow who will be retiring at the end of January. Jim has been a valued group member for 25 years and in the Construction Industry for over 30 years. He served numerous terms as a group officer and has served the rest of the association on the CMA Board of Directors since 2010.

We will miss his loyalty to the group, his professionalism to the job and mostly the kindness and friendship he has extended to all for over a quarter of a century.

Last year, under the leadership of Alvin Moreno of Nestle Inc., CMA launched the Supplier Risk Credit Group, a Best Practices industry exchange group for those who have been assigned the task of vetting their vendors or for those credit managers who wished to enhance their position at their company by learning this job. Who better than a credit manager to evaluate RISK from the vendor side of the chain?

The Group has had four informative discussions and has attracted members such as PepsiCo to the meetings.

On Wednesday, January 27, we are taking the information gathered at these meetings and beginning to build the platform establishing policies and procedures for those assigned this task.

If you have an interest in this or would like to pass it on to the appropriate person at your company, we would be delighted to have them join us in person in Burbank or through web conferencing.

Here is a partial agenda for the meeting:

REVIEW OF LAST MEETING
1. Members describe any enhancements they have made to their vetting process or roadblocks encountered
2. Groundwork and Decisions Required Prior to Establishing Process (including 80/20 Rule-Which vendors will you include in your process?, Has a budget been discussed and approved?, Has Staffing been arranged?, Identify critical vendors, single, sole source vendors outside of 80/20 rule, Has an acceptable chain of command been established?, Has a workable timeline to roll out, review and assess been established?)

Like many of you, I made a number of New Year’s resolutions, and like many of you, I’ve already broken several (perhaps a 5-day-a-week commitment to go to the gym when it opens at 5 am was overly ambitious). At CMA, we have resolved to make mission and values a priority for this year and moving forward. Of course we have a mission and values, but we don’t spend enough time communicating them to our staff and to our members. Like many organizations, CMA revisits these mantras every few years at Board and staff retreats, but we don’t keep the spirit alive in the years between those manic word-smithing sessions. Many organizations and functional departments are guilty of this. Therefore, we at CMA resolve to make mission and values the reasons why we exist and why we do what we do.

Regardless of the actual words we will use to communicate our mission, it will stand for the idea that CMA is here to help credit professionals do their jobs more effectively and efficiently, which hopefully means making it easier to do more with less, and with greater speed and accuracy. There are many ways CMA can support credit professionals and credit operations – knowledge aggregated from the thousands of credit professionals who share their experiences through networking and publications, trade data from credit bureaus and credit group members, a variety of other third-party services, and professional education and training.

That last component of support, professional education and training, represents one of CMA’s deeply held values – a dedication to life-long learning. This is a value I wrote about before we launched our first CreditScape Summit last Fall. I am revisiting this value because we truly believe that continual education on basic and emerging credit topics, and regular training on skills related to day-to-day credit tasks, will keep credit operations sharp and well-oiled. Ultimately, any operating department within a company should focus on one thing, improving performance. How ever your company and department measures performance, you have to make changes to get better results (remember the definition of insanity?). We all know the reality of making change – it’s uncomfortable, it’s time consuming, it’s expensive – but if we are going to pay more than lip service to performance improvement, we have to take an honest look at our operations and determine where we can improve processes that will make a difference in performance.

We have designed the CreditScape Spring Summit and Annual Meeting, powered by UTA, to give our members an opportunity to get away from the daily distractions of the credit operation to focus on learning from other members who have successfully driven change within their credit operations that lead to improved performance. Many of the process improvements that will be discussed are related to technology solutions that have helped drive efficiency and accuracy by automating certain processes. During the opening address, attendees will hear from Michael Puccinelli, CCE, who has made a career out of process improvement by investing in his team (he requires that everyone be trained and NACM Certified) and investing in technology. At his last two companies, VeriSign and now Equinix, Michael has successfully leveraged a highly trained staff and technology to create what he refers to as systemic solutions to drive efficiencies and high performance throughout a global credit operation. It’s work like this that earned him the first annual NACM OD Glaus Credit Executive of Distinction Award and we know that he will have some valuable advice for CreditScape participants, regardless of company or credit department size or industry.

During the CMA Annual Meeting Luncheon on Day 2 of CreditScape, we will recognize and celebrate those credit professionals like Michael Puccinelli who have made significant contributions to their companies and to the credit profession through their dedication to process and performance improvement. To register, visit www.creditscapeconference.com. Hope to see you there.

Consider this scenario: your boss tells you, the credit manager, that he/she’s just sold a palletload of your company’s widgets to a customer in a foreign country, and that you need to just “make it work and collect the money.” Sound familiar? We hear examples like that one over and over from our clients. So what are the risks that you should look out for? There are three major country factors that we look for that determine foreign risk: economic, political and terrorism.

Economic Risk

In a global economy, some countries are connected in a virtual domino effect, some obviously and others not. For example, imagine that your boss asks you to do business with an Australian company. At the same time, you are aware of the political unrest in Greece. If Greece defaults, Germany would be impacted as they are a major economic trading partner and major debt holder. This could impact the company you’re doing business with, as Germany is a major trading partner with Australia. Therefore, if you’re doing business in Australia, you could be impacted by the situation in Greece, even though Greece isn’t a major trading partner with Australia.

Regional country risk could also be a factor. For instance, Venezuela literally has no cash available to pay its creditors, and this would impact your company’s ability to get paid.

Finally, you still need to assess the company risk, based on a number of factors including capacity and character. Some of this information can be obtained through reports and assessments from companies like Skyminder.

Political Risk

Imagine this scenario: You have an agreement in place with a foreign customer, and then a revolution breaks out in their country. Despite their best efforts and intentions, the deal is off, and they may not be able to ship out or pay for those products. Similarly, in other countries, governments have the ability to take over private companies, and there’s very little the owner can do to stop it.

Another political factor is the type and structure of the government. For instance, look at the current stock market in China. Dictatorship controls the market and valuation of yen. Which could be strong (or weaK) compared to U.S. dollars at the time of the transaction. Could your company be left holding the proverbial “bag?”

Finally, the U.S. government could be a factor. In the case of Russia invading Ukraine, will our Congress impose sanctions? If so, is your company prepared?

Terrorism

In a post 9/11 world, terrorism is a huge (and self-explanatory) factor.

How can you make an informed decision?

With all of the uncertainty I’ve been talking about in this blog post, how can you make an informed decision? There are a couple of resources that I can recommend.

FCIB is an excellent source for country reports, political risk and credit and collections surveys.

For company risk, no one should use a single source for business information reports. Effective risk management requires access to multiple sources. The preferred solution is to look to providers who can aggregate information from multiple sources. My company, SkyMinder, is able to provide freshly investigated reports for any company in any country in the world.

Mike Lindenmuth is Vice President of SkyMinder, a provider of global company and domestic credit reports. He can be reached at 813-636-0981 ext. 237, m.lindenmuth@c3bizinfo.com, or at www.c3bizinfo.com.

To some, January 1st is like the first day of school. Everything starts out fresh and clean (even though I know many of your fiscal years start at different times of the year). For those group members who attend and contribute regularly, the beginning of the year is just a continuation of what you have done in the past.

However, some of you have not attended your Industry Credit Group meetings in months (and for others years) and you may feel a bit embarrassed showing up. Others may not be in an Industry Credit Group at all.

As someone who has facilitated meetings longer than many of you have been alive, let me inform you that nothing could be further from the truth. Your contributions and attendance will be welcomed by all, whether it is at a meeting or joining a conference call. By including your trade data and credit knowledge, the other members have more information to make informed credit decisions. The real embarrassment would be you opening an account that the other group members have previously discussed and determined individually to be risky.

There are two ways to increase the value of an Industry Credit Group; bring in new members and bring back current members who have for whatever reason, have gone astray. Either way, EVERYONE WINS.

As we begin a new year, we ask you on behalf of the other members of your group, to commit to attending each meeting/call, to contribute daily through alerts, RFIs and monthly if your group has a report. Take your calendar and mark off the meeting days for the entire year so nothing else can be scheduled during that time period. Prepare the accounts you wish to discuss prior to the meeting and any topic you would like to bring up. Let’s make 2016 the Year of the Group.

The dictionary definition of a mentor is someone who teaches or gives help and advice to a less experienced and often younger person, someone who is a trusted counselor or guide in developing a career path. The January CMA Member of the Month is someone who defines the word “MENTOR,” whose personal leadership and knowledge of the credit profession has led others to take the next step in their careers.

Ross Cirrincione has had the opportunity to mentor many over the years. An active Credit Management Association volunteer, he is really a person who is willing to share his knowledge with others to help them as individuals grow into careers. Two of his mentees rose to be corporate credit managers.

If that wasn’t enough, he volunteered to work with an individual to help her learn to manage her time better. He drove from San Diego to Irvine every Monday for a month to help her become more organized, helping her immensely.

Among his volunteer work, he spent time as a member of a panel on construction law last year at the Western Region Credit Conference and will participate as a panelist at the upcoming CreditScape Summit in March and the Credit Executive Symposium.

Despite all of this, he is one of the most humble and approachable credit professionals in the industry (as long as you don’t owe his company any money!)

For those who attend any of the Industry Credit Group meetings that he’s involved with, Ross is not shy about speaking up to give his opinion and frequently stays after meetings to clarify points and give advice to credit managers on the techniques he uses.

On behalf of the Credit Management profession, thanks for all you do Ross!Members of the Month are nominated by CMA members, Group members, volunteers and CMA staff to highlight those members (or member companies) whose engagement with CMA has helped improve the overall credit profession for others.

For more information on how you can participate in any of the areas mentioned within this article, or to nominate any members for this honor, contact Diana Escobar at descobar@emailcma.org or 818-972-5300.

The CMA Nominating Committee is now accepting nominations and applications for service on the 2016-2017 Board of Directors. If you would like to nominate a candidate for service, or you are interested in applying for a Director position directly, please complete a Candidate Nomination or Application form and return it to CMA by January 29, 2016. Click here to download the forms.

Board of Directors Qualifications and Responsibilities

As provided by the Bylaws of CMA, the Board of Directors oversees the general operation and sets policy for the Association. It is, therefore, essential that members of the Board understand their responsibilities and be willing to commit the time and effort necessary to do justice to this great organization.

The responsibilities and qualifications of a member of the Board are as follows:

2. A Board member must be the authorized representative of his/her company to CMA.

3. Attend the Annual Meeting and Installation of Officers and Directors, March 24-25, 2016.

4. Attend regular Board meetings, four times per year.

5. Attend the Annual Board Retreat (two days in February).

6. Review and accept financial and operating statements of the Association.

7. Review and approve reports of committees and project teams.

8. Serve on various committees of the Association as assigned by the Chair of the Board.

9. Show support for the Association and its programs by participating in CMA’s member services and by attending educational and networking functions, and promote CMA’s services to other members and prospective members at every opportunity.

10. When possible, attend the annual NACM Credit Congress held each May or June, and/or CMA’s CreditScape Summits (Spring and Fall).

Yes, it’s that time of year again and it’s hard to believe another year has passed us by. I hope everyone enjoyed spending time with their families and relatives over the holiday season. As we start 2016, everyone always asks “Have you made your New Year’s resolutions yet?” Or “What are your New Year’s resolutions this year?” As I write this blog, I am thinking about what my personal and professional resolutions will be this year. Let me take a minute or two and suggest a few resolutions you could include with yours.

If each one of us could include a resolution or two about CMA we could make this association stronger for all of us. As you read through the suggestions, hopefully you will find some to help you get started. It’s important to have the backing and support of Credit Management Association for your credit department as well as your company and I appreciate you taking the time to read though the following. Enjoy and “Happy New Year!”

Construction Forms Filing Services (CFFS) – Have you outgrown your current provider and need to try something new? You can always try CFFS…CMA has accurate, personal, and cost-effective construction forms filing in all 50 states, and has access to a network of attorneys and resources to help fulfill all of your construction needs.

Professional Development – Are you looking to update your skills? CMA has quite a few options from the CreditScape Spring and Fall Summits, to online courses, live and recorded webinars, and the courses available to get your Professional Credit Certification all in one place.

Industry Credit Groups (ICG) – Please take some time and experience the ICG’s CMA has to offer. We participate and always come away with some useful information. CMA’s 60 current groups network and share factual information, and provide you with responses promptly from other group members so you can then make more educated decisions with your new accounts and or your current A/R for companies within your own vertical industry who share the same customers as your company does.

Business Credit Reports – Maybe you already have contracts with a provider or two…sometimes you are looking for supplementary information to help you with your business decisions. Or maybe you are unsure if your current data provider is giving you as much information as there is available. CMA offers the anscersX multi-bureau commercial credit report, NACM National Trade Credit Report, as well as DNBi, Equifax and Experian. Additionally, they offer consumer reports and international reports as well. It gives you the opportunity to purchase on a report by report basis.

Maybe it’s as simple as just wanting to learn more about what CMA has to offer. If you go to www.anscers.com click on the education tab and you can join a “free” webinar called “Maximize your Membership” scheduled on February 17th from 9:00 am to 10:00 am hosted by Michael Mitchell, President and CEO of Credit Management Association. Check it out!

Please remember we need you to support “your” credit association when you can and as always “thank you” for your support. I encourage you to send in any ideas to improve your credit association. Let me know your thoughts. I’d love to hear your feedback.

Michael W. Fenner, CBA, is the Credit Management Association Chairman and Regional Credit Manager for Beacon Roofing Supply. He can be reached at 714-321-8187, or mfenner@becn.com.

In an effort to allow for our staff to spend time with their families during the holiday season, the CMA offices will be closed Christmas Eve and Christmas Day, and we’ll be open until noon on New Year’s Eve and closed New Year’s day. The office will be open during normal hours Monday through Friday on all days except for those.

From everyone at Credit Management Association, we wish you and yours a very happy and healthy holiday season, and look forward to serving you in 2016.

Over the last 5 years, I have written approximately 55 newsletters preaching the value of Industry Credit Groups and encouraging your participation. I do this because I believe that a credit group is the single most valuable resource a credit manager can have. In the spirit of giving, Groups give you valuable data that many times you can only get from the Industry Credit Groups (and more importantly, being engaged in them). As you prepare for the holidays, think about these tips on how you and your company can reap the benefits of this modified Christmas Carole, THE 12 DAYS OF CHRISTMAS

1st day … Mark all of your group’s meeting days for the year on your 2016 calendar so that time is locked in

2nd day…Make sure that you and all of your credit staff is registered on www.anscers.com. If they aren’t familiar with the site (and all of its resources), call CMA’s Lisa Wong for training

3rd day … Discuss benefits of A/R contributions with your boss if you’re not already contributing

4th day … Look at credit references received for potential new group members and offer to call

5th day… Make sure all RFIs have been responded to

6th day… Check aging for any unusual slowness and enter those accounts as alerts

7th day … Contact CMA to inquire about volunteering to assist any committees needing new people and new ideas

8th day… Lead discussion regarding what peripheral industries or companies might fit in group due to common customers and let us help get them to join the group

9th day… Participate in the meetings. Group membership usually pays for itself 10 times over due to advance knowledge of risky accounts. We encourage you to become engaged in your Group!

10th day… If you’re not currently in group, call CMA to see if one exists in your industry

11th day… If no group exists, gather a list of competitors and offer to assist in contacting

12th day… Take a break, you have earned it

Have the Happiest of Holiday Seasons and a Healthy New Year
Larry Convoy

For construction-related businesses, filing preliminary notices, intent to liens and mechanics liens, and more, can be a necessary, but tedious and time-intensive process. CMA’s Construction Forms Filing Service offers assistance with helping companies ensure future mechanics liens rights. In order to showcase some of these services and inform our customers, we invite you to join CMA’s Amber Jackson, who has 10+ years of expertise in construction forms filing, as she reviews a myriad of tools available through CMA’s Construction Forms Filing Service, and the many tools that CMA offers for companies in the construction industry in a free webinar on January 26.

Additionally, there will be a number of additional webinars and seminars, hosted by licensed attorneys, which will cover state-specific lien law provisions and procedures that will help as well, beginning with California basic lien law on February 4. More states will be added to our education program soon.

Many of CMA’s members have reported that a growing problem in their companies seems to be their ability to receive trade credit related emails through their email spam filters. It seems that an increasing number of wanted emails from customers, creditors, trade groups such as Credit Management Association and others aren’t being received because IT departments filter out emails from bulk servers, or ones with words like “debt,” “collections,” “credit” and “past due” in the subject line or the body of the email itself. Such filters can automatically send wanted emails to your spam folder, or even worse, automatically deleted—unseen, unknown and unread by you.

At CMA, we filter incoming messages for malware and viruses, which can be embedded in commonly traded files via email such as Microsoft documents (Word, Excel), PDFs, and especially ZIP files. Similarly, as we communicate RFIs, meeting requests and information with our members, we routinely ask members to check their junk email if they should have received emails from our servers that they say they didn’t. On occasion, we make use of cloud storage transfer sites such as DropBox or WeTransfer to avoid emailing files to get through tough firewalls (even our own!).

Here are several things I recommend you do to ensure that you’re receiving emails from your customers and trade association.

Add your customers, associations and others to a safe “white list” to allow all emails from them to come to your main email inbox.

At CMA, we love our members, and want to recognize our engaged members, those who utilize our services, actively participate in Industry Credit Group meetings and answer RFIs, submit their data to the NACM database, inspire other credit managers by mentoring or even providing ideas about best practices their companies use, or furthering their own career potential through continuing education offerings. In an effort to tell some of their stories, CMA’s membership committee has created an opportunity to showcase these exemplary members through a series of monthly blog posts recognizing the CMA Member of the Month.

Members of the Month will be nominated by CMA members, Group members, volunteers and CMA staff to highlight those members (or member companies) whose engagement with CMA has helped improve the overall credit profession for others.

Among the criteria that will be used will be:

Mentor who has helped in your professional development

Exemplary Industry Credit Group Service

Exemplary use of CMA’s services

Professional development leader who attends and actively participates in courses, seminars and webinars

Outstanding community volunteer outside of the credit profession

CMA volunteer who give countless hours of their time to promote CMA

Outstanding credit industry leader

…and more.

In January, we’d like to honor a special mentor that has helped in your professional development. Submit your entry either by email to your group facilitator or send an email to Diana Escobar (descobar@emailcma.org) with one or more reasons why the person deserves to be recognized.

Though CMA has many valuable tools and services for the credit professional, they’re only as good as the input that our members put into them. For more information on how you can become more engaged in CMA, including a tour of the products and services we offer, or ideas on where you can volunteer, contact Diana Escobar at descobar@emailcma.org or 818-972-5300.

“Being a member of CMA has been a great experience for me. I look to the Association for education and networking opportunities. The webinars offered are such a wonderful example of efficiency. There is minimal outlay of resources for maximum benefit. I also attended a one-day session on international credit lead by Eddy Sumar which was fantastic. Attending the Western Region Credit Conference for years has been yet another wonderful education and networking opportunity. I firmly believe that knowledge is the key and it is what keeps us ahead in our profession.

In addition to CMA, our national credit organization (NACM) supports our quest for education in many ways including through the professional designation program. I am a big believer in education as one can tell so that is why I worked toward each professional designation (CBA, CBF & CCE) and finally achieved the CCE designation after several years. Earning the CCE designation was a valuable and useful experience that I reference in my career every day.

Networking is also very important for us as credit managers. CMA provides many opportunities for us to connect and reconnect with one another. Sharing our experiences at venues such as the CMA Annual Meeting or an Industry Credit Group meeting is truly invaluable as a credit professional. CMA provides other services for the credit manager as well. One of the most important things that CMA provides is a staff that cares and supports the credit professionals in our area.”

Tracy Rosenbach, CCE
Silgan Containers LLC
CMA member since 1995

“I Am CMA” is a Membership Committee driven initiative to allow members to share the most valuable aspects of their membership with CMA members. The monthly series explores CMA’s different programs and services and how they have helped members. With a full range of business credit services from Industry Credit Groups to credit reporting to construction forms filing services to collections to business insolvency, we hope the series will inspire you to utilize CMA more to help provide information to reduce your company’s overall risk.

For more information on the blogs, or to be featured, contact CMA Communications Manager Alan Dicker at 323-573-0840 or adicker@emailcma.org.

The NACM professional certification program, sponsored by the National Association of Credit Management, has helped define and establish professional standards in this demanding and rapidly changing field, and fosters recognition of those individuals who possess special expertise. Among credit management professionals, the professional certification program is respected and appreciated. Not only is participation in the program a mark of distinction throughout the profession, but it offers expanded knowledge of the credit profession, better career opportunities, heightened professional recognition, and demonstration of standards of professional excellence.

Congratulations to the following Designees who passed their NACM-Certified Professional Certification exam in November.

For those who are interested in obtaining their certifications, a free informational webinar explaining the benefits of the designation program is available on demand under the education tab at www.CreditManagementAssociation.org. CMA has scheduled its Winter courses for the Credit Business Associate (CBA) program, which can also be accessed via the education tab.

For more information on how to achieve your Designations, please contact Lisa Wong, Member Representative Associate at (951) 672-0581, or lwong@emailcma.org.

I hope everyone enjoyed their time away from the daily grind and that you were able to be with your family this Thanksgiving season. As I write this blog, I was thinking that we all like to give around the holidays, to our families, friends, the community etc. In 2007, Credit Management Association awarded me with a scholarship to attend the Western Region Credit Conference. I was very grateful for the opportunity as it really helped my career. And for that very reason I wanted to give back to CMA. Ironically, I ran into Michael Mitchell, CMA President and CEO at the airport after that conference and told him I wanted to “give back” to the association and the rest is history. I was nominated to the Board of Directors and I have served on the committees listed below to help make our association better for you.

I wanted to share a few bullet points today so you too can consider ways that you can give back and make your association a stronger, better organization for all of us. Please take a few minutes to read below and if you are interested in helping out just let me know. I would be happy to point you in the right direction. I appreciate your time and consideration.

CMA Board of Directors – The board meets five times a year and determines the policies and direction of the Association. The Board is responsible for monitoring progress towards the achievement of the strategic and operating objectives of the Association. This has been a very educational experience as you work with credit managers from different types of companies. It’s both challenging and rewarding as you go through the process.

Membership Committee – This team focuses on membership issues such as member benefits, acquisition and retention, as well as member engagement, and member categories. This group is interesting and stimulating, they help members understand the “value” of their memberships.

Professional Development – This is the committee that sets the direction of the educational courses, seminars and webinars that CMA offers. As an example, they work on the Spring and Fall CreditScape sessions that feature roundtable experiences taught by veteran credit professionals. These meetings are taught at an advanced and high level. Discussions include business issues, best practices and tips on valuable resources.

Honors and Awards Committee – This committee focuses on member recognition, with a primary responsibility of selecting members for CMA’s annual awards as well as nominating members for NACM’s National awards. There is nothing more gratifying than nominating your peers who have worked so hard in the industry.

Nominating Committee – This group selects nominees for the Treasurer and other Director positions available for election for the year. This committee assists in the review of candidates, through systems and checklists. Another opportunity to select outstanding peers in the credit community.

What can you do to help your credit association? Please reach out as we are always looking for talented people to be nominated and share their experiences through their leadership and volunteer work.

Please remember we need you to support “your” credit association when you can and as always “thank you” for your support. I encourage you to send in any ideas to improve your credit association. Let me know your thoughts. I’d love to hear your feedback. Thank you for taking time to read my blog.

Michael W. Fenner, CBA, is the Credit Management Association Chairman and Regional Credit Manager for Beacon Roofing Supply. He can be reached at 714-321-8187, or mfenner@becn.com.

The holidays are a time to reflect on the past year, and an opportunity to evaluate how successful CMA has been in accomplishing our goals this year. With Thanksgiving quickly approaching, your CMA staff has listed a number of things we can be thankful for.

First and foremost, we’re thankful for you, our members, who support the efforts of the credit management profession by actively participating. Whether it’s done through submitting your RFIs, submitting your full aging data, or even just attending Industry Credit Group meetings or events such as CreditScape, your contributions make the entire credit management profession better, and we’re grateful. Over the past year, we’ve taken steps to make it easier for members to participate by expanding the number of free educational events, anscers training sessions and opportunities for members (both new and returning) to learn how to maximize their membership with CMA. For those who have participated in any of these sessions, thank you!

We’re thankful for our partners in the credit information industry who have made it possible to provide our members with valuable, one-of-a-kind products. Thanks to our partners Bob Shultz, Keith Doyle, Dun & Bradstreet, Equifax, and Experian for helping us provide members with the “big picture” on any account with the anscersX multi-bureau trade credit report. Thanks also to our partners Ansonia and Southwest Business Credit for helping us solve the problem of gathering real-time title information with the most innovative credit report for the construction industry, The Construction Credit Report.

We’re thankful to our exclusive partner in third-party collections, AG Adjustments, which has recovered hundreds of thousands of dollars in unpaid debts for CMA members. We are thankful for all of our many other vendor member service providers for their assistance with international credit sales, UCCs, payment processing, and deductions management.

We’re thankful for Paul Beretz, CICE; David Osburn, MBA; Jim Menard, CCE; and a host of other dedicated instructors who have supported the professional development of so many of our credit professionals.

We’re thankful for our volunteers, those who have served on the CMA Board of Directors and on committees like Membership and Professional Development. Additionally, we thank those members who have provided CMA staff with lots of great feedback on topics of interest which have been used to create more relevant education and training programs.

2015 has been a really great year at CMA, and we have a lot to be thankful for. We’re looking forward to an even better 2016. Thanks again for your support, and Happy Thanksgiving to you and your families.

There’s a lot that’s bundled in the $99 a month Industry Credit Group dues that group members pay. But, for sake of argument, let’s pretend for a moment that CMA unbundled those items and that you had to pay for each of those benefits separately.

Many service providers, including CMA, have weighed the advantages of an unbundled price structure versus a bundled one; to charge for each item or service as opposed to a monthly fee. I have devised the following pricelist and an approximate cost for a typical month in most groups to see what that $99 a month really gets you.

INDUSTRY GROUP STATEMENT FOR COMPANY XYZ FOR OCTOBER, 2015

Received 10 RFIs in month @ $22.50(cost of average Experian or Dun & Bradstreet, most groups use double that amount)

12 NSF check notifications @ $5 each

4 placed for collection notices @$50 each

1 change of owner announcement -NO CHARGE

1 Chapter 7 bankruptcy alerts @ $500

2 “business is closed” alerts @ $250 each

1 mechanic’s lien filed @ $300

4 clearances at group meeting @ $5 each

Educated by group member on various topics-PRICELESS

Recommendation NOT TO BUY computer system or software package by member-$10,000

Informed of new A/P contact at customer’s or owner’s cell phone #- NO CHARGE

This adds up to $11,805 for one month, considerably higher than the bundled price of $99/month now charged to most groups. This does not include a Past Due list or Meeting Review reports.

While I do not think this will ever become the standard, it does make you realize how cost effective participation in a group is. The more RFIs submitted and alerts posted, the Return on Investment becomes even greater.

With the holidays upon us, make sure you set aside time to attend the meetings and submit your reports. The survival of many businesses will be determined in the next 2 months.

Note: this is one in a series of international blogs to help credit managers learn how to assess risk in foreign countries and expand their potential customer base.

As a consultant, NaviTrade is approached by companies on a regular basis asking for our assistance in developing and implementing financing programs for their international business. Sometimes companies are frustrated about and even confused as to the need for financing. In fact, we often times see the need for foreign receivables financing as a natural outcome of successful international growth strategies that in part define a company headed in the right direction. To gain a better understanding of this issue, it’s productive to consider the many views of key management team members at typical small to medium-sized companies, including the following:

VP of International Sales – often times tasked with growing a business globally, a VP in this position may find several very attractive overseas markets. To succeed in these markets, the best strategies may require relationships with strategic partners in certain markets – often distributors – that can lead the company to successful market penetrations and substantial sales.

What does it take to make a relationship with an overseas distributor work? Many things, of course, including some level of understanding of the financing constraints facing the distributor. Overseas distributors are often thinly capitalized (i.e., they don’t have much money to work with!) and are looking for substantial open account terms to match their cash flow cycle. Distributor cash flow cycle means what? Let’s say the overseas distributor places an order with your company, it takes 30 days to receive the goods, they spend 30 days getting the product out into the market, then they get paid by the retailer 30 days after that – we would call this a 90 day “distributor cash flow cycle” from the point of view of the U.S. company. But wait! Isn’t the 90 day distributor cash flow cycle the distributor’s problem – not ours?! Right?! No – this is very much the U.S. company’s problem too!

If this topic is of interest to you, I invite you to join me for a free 45-minute Webinar on December 2 at 9am PST to delve deeper into this issue, take a further look at the views of the Credit Manager, CFO, and CEO, and investigate how this all relates to and where we ultimately find a financing solution!

Brent Hoots is president of NaviTrade Structured Finance LLC (NaviTrade), a financial advisory and brokerage firm that specializes in helping U.S. and overseas companies and financial institutions finance international transactions, better manage overseas risks and marketing related issues, and achieve their global potential. He can be reached at (720) 841-6371 or by email at bhoots@navitrade.com.

“‘I am CMA’ covers a wide array of Why I will continue to support CMA with my membership and volunteer as a committee member.

CMA allows me 24-hour access to information on their website. I use their Encyclopedia of Credit as a tool for educating my staff on all aspects of credit, Bankruptcy laws, credit practices, document examples for collection etc. The teleconferences and Credit events held by CMA are educational, enjoyable and affordable for my entire department.

When assessing the potential risk of a new customer, some of the outside reporting agencies information may not be updated for 6-12 months. This allows for errors and potential high risk decisions which could lead to a bad debt write off. I am confident in using CMA’s RFIs and anscers reports, that the information provided is current and precise allowing me to make confident decisions lowering my companies’ risk.

My credit group through CMA has enabled me to continue invaluable relationships with peers in my industry. I have made friends for life who are professional, educated and respect the credit confidentiality as much as CMA does.

I AM CMA.”

Anne Mattson
Tropitone Credit Manager
21 years“I Am CMA” is a Membership Committee driven initiative to allow members to share the most valuable aspects of their membership with CMA members. The monthly series explores CMA’s different programs and services and how they have helped members. With a full range of business credit services from Industry Credit Groups to credit reporting to construction forms filing services to collections to business insolvency, we hope the series will inspire you to utilize CMA more to help provide information to reduce your company’s overall risk.

For more information on the blogs, or to be featured, contact CMA Communications Manager Alan Dicker at 323-573-0840 or adicker@emailcma.org.

Note: this is one in a series of international blogs to help credit managers learn how to assess risk in foreign countries and expand their potential customer base.

Most CMA members don’t know me. I don’t make it to many CMA activities because I live in Chicago. But about a year ago, I joined CMA as a vendor member who provides credit-related services to CMA members.

Then, in January, I am planning to be in Los Angeles to conduct some classroom-style seminars on these techniques. If the webinar makes you decide you’d like to understand some of these techniques better or get some classroom practice at matching risks with risk-mitigation techniques, I hope you’ll come to one or more of these seminars. In addition to risk mitigation, one will be on structures for arranging financing for your domestic and international sales (much of which is built on the risk mitigation techniques). These seminars are not limited to CMA members, but CMA members will get a discount.

My objective is to provide education to Credit Managers. Information you can use. My experience-35 years of it-is as a banker and a credit insurer. I’m an expert in various techniques for managing credit risk and financing receivables, with particular expertise in export transactions. Please feel free to call me whenever you have a question about letters of credit or credit insurance or foreign exchange contracts.

And I look forward to getting to Los Angeles, and out of Chicago, in January.

Buddy Baker is president of Global Trade Risk Management Strategies, LLC, a consulting firm that specializes in providing education content to Credit Managers. Baker has 35 years of experience as a banker and a credit insurer, and is an expert in various techniques for managing credit risk and financing receivables, with particular expertise in export transactions. He can be reached at (847) 830-3038, or by email at buddy.baker@gtrisk.com.

Note: this is one in a series of international blogs to help credit managers learn how to assess risk in foreign countries and expand their potential customer base.

A Foreign-Trade Zone is a secure, access-restricted, Customs & Border Protection privileged area in or near a U.S. port of entry where merchandise both foreign and domestic may be admitted, stored, exhibited, manipulated, temporarily removed, manufactured, or destroyed duty-free! Duties, certain user fees and taxes are only assessed on products that are transferred out of the FTZ and imported into the United States for consumption. Products that are transferred out of the FTZ and exported abroad are exempt from any duty, user fees or taxes

Benefits:
1. Duty Deferral – Duties are only paid when imported merchandise is entered into the U.S. Customs territory.

2. Duty Avoidance – There are no duties paid on merchandise that is exported from a FTZ, transferred to another zone or destroyed. This eliminates the need to manage costly and time-consuming Duty Drawback programs.

3. Weekly Entry – Customs allow for a weekly entry processing, which benefits importers because the Merchandise Processing Fees are capped at $485 on a weekly basis, versus per shipment basis.

4. Fee Deferral – Harbor Maintenance Fee is paid quarterly and in a single payment.

5. Enhanced Security – By using a FTZ, the “internal controls” requirements of section 404 of the Sarbanes-Oxley Act are met. Participants in the Customs Trade Partnership Against Terrorism (C-TPAT) program are eligible for additional benefits provided by Customs.

6. Expedited Logistics – relocating CHB to your facility and expedite the delivery to your facility without customs clearance. Potential savings is up to two days.

7. Ease of Paperwork – through automation of the FTZ, the paperwork submitted for receiving and the weekly entry program is greatly diminished with all parties and the processes for approval are expedited dramatically.

8. Manipulation – all manipulations are authorized and completed without physical Customs supervision. Goods are allowed to enter an FTZ and have the following manipulations: clean, repair, fix, improve in value, amend, exhibit, pick & pack, and many other functions.

David Harlow represents four of the nine Grantees in Southern California and assists regions, cities, and businesses with the implementation and oversight of the FTZ Program. Additionally, ITC provides services in eight different states while continuing to grow. ITC was founded in 2002 as an International Trade Consulting Firm and a second generation National Corporate Custom House Broker. ITC provides a unique blend of international trade related services to importers, exporters, manufacturers, distributors, public utilities, and local government, focusing on CBP and the Foreign Trade Zone.

Several international-themed webinars have been scheduled for early December in an effort to get CMA members to think globally.

The webinars, which will run 30 minutes each and are free for CMA members to attend, will take place December 1-3 at 9:00 AM PST. Descriptions for the webinars (and registration information) can be found at www.creditmanagementassociation.org/events.

December 1, 2015: How to Achieve Procurement From Using Foreign Trade Zones (Speaker: David Harlow, ITC-Diligence)

Wow…it’s hard to believe the holidays are just around the corner. We all know this time of the year we need to be more vigilant in regard to protecting our assets. I wanted to take a few minutes and list some bullet points to think about so you can share with your teams. I don’t have all of the answers so feel free to share your experience as well. You know if we close any potential loop holes now we will save our companies some money and hopefully minimize any possible theft this holiday season. Let’s make sure we all review our credit policies with our team members today.

Below are some tips about accepting checks and or credit cards:

Know your customer. – Have you dealt with this person before? If not, it might be a sign.

Avoid taking credit card payments over the phone from customers you don’t know. – It’s hard to verify the identity of the person on the phone. Have them come in to verify them and swipe the card.

The customer won’t show their ID. – Call the company number on the check to verify the person, call the bank to see if the account is open or closed. Chances are something will come out of the additional questions you are asking.

Is the driver’s license preprinted on the check or prewritten on the check already? – Still take the time to review and verify the customer’s identification. They could be trying to slip one by you.

Is a rental truck picking up the material? – Notify your yard personnel to keep an eye out for customers loading material into rental trucks. This is a very common sign.

Are they not from your area? – Is there ID from San Diego but they are purchasing from you in Los Angeles? They may have a job in your area but keep an eye out for this one.

How is the customer acting, are they nervous? – Are they avoiding eye contact, are they acting suspicious, being pushy after a very simple request?

Does the e-mail address match up with the company name? – Double check to see if the e-mail address matches up with the information on the check and or credit card authorization form.

An out of the area phone number. – Do they have an area code that isn’t from your area. Take a second look and confirm.

If it doesn’t feel right it probably isn’t. – We all have that gut feeling at times. Have your teams contact your credit department if they are feeling uncomfortable.

Did I mention know your customer? – Always make sure you know who you are dealing with.

Fraud can hit us many different ways, but it always bites us. They are always persistent and unyielding and it doesn’t matter where you are from New York to California. At times they are highly organized and very sophisticated. And other times they are by themselves looking for an easy target. Don’t be an easy target. As always keep your eyes and ears open.

Thank you for taking a few minutes out of your busy schedule to read my blog.

Please remember we need you to support “your” credit association when you can and as always “thank you” for your support. I encourage you to send in any ideas to improve your credit association. Let me know your thoughts. I’d love to hear your feedback.

Michael W. Fenner, CBA, is the Credit Management Association Chairman and Regional Credit Manager for Beacon Roofing Supply. He can be reached at 714-321-8187, or mfenner@becn.com.

Attendees of the 2016 Spring CreditScape Summit and Annual Meeting, which takes place March 24-25, 2016 at the Island Hotel in Newport Beach, will learn about the efficient digital credit department, according to CMA president and CEO Mike Mitchell. “We listened to feedback from Fall CreditScape attendees and members, and the survey results overwhelmingly suggested the topic should resonate with most credit managers today.”

How can you play and get paid in the global marketplace? Over the last two years, CMA has been exploring how member companies can grow export sales using a variety of credit and trade finance resources to mitigate the risk of selling into other countries.

Today, I am attending Discover Global Markets, a two-day export conference hosted by the U.S. Commercial Service, the trade promotion arm of the U.S. Department of Commerce’s International Trade Administration (http://export.gov/discoverglobalmarkets). I am looking for information and insights I can bring back to the CMA membership.

In the meantime, we have many other resources that can help you sell into the global marketplace. CMA established a strategic alliance with the U.S. DOC’s Commercial Services because its trade professionals in over 100 U.S. cities and in more than 75 countries help U.S. companies get started in exporting or increase sales to new global markets (http://www.trade.gov/cs). Regional Director Richard Swanson recently participated in a panel discussion on international collections at CMA’s Fall CreditScape Summit, and he has provided CMA members with guidance on how to access U.S. government export resources in many other countries. You can also find all the basics at www.export.gov.

When you conduct international credit investigations, CMA recommends long-time partner Skyminder which offers reliable, up-to date information on millions of public and private companies worldwide. Details on how to find them are here.

CMA has three upcoming webinars before the end of the year that will give you more tools for exporting your products and securing your receivables.

Outsourcing is not easy. It requires planning and tight partnering between the provider and the client. To be successful critical challenges must be overcome. All the processes related to the outsourced functions must be considered and satisfied. The quote to cash process must be managed holistically looking at performance measures and Service Level Agreements illustrating joint accountability for the desired outcomes. The impact on your customers should be positive.

Your company may be dependent on the provider’s technology. Make sure it is robust and secure. Your users and management should have complete transparency to day to day account management and performance results. Integration of all documentation with easy access to materials for research, collections and legal purposes should be embedded in the provider’s process.

Requires Significant Pre-Implementation Preparation

Prepare your company for changes with thorough up front planning. By doing so, as a client you can expect to see the efficiency, support and the hoped for return on the outsource investment.

Prior to engaging an outsource provider it is essential to define the scope of the engagement, expected results and be comfortable with the anticipated return on investment.

This requires input and participation by all internal stakeholders affected by the new arrangement.

Metrics: Both parties must agree on specific Service Level Agreement (SLA) metrics. These will be incorporated into the outsource engagement agreement.

Communication plan: Require the outsource provider to report to and meet with internal clients routinely.

Pre-engagement due diligence: The provider must have a thorough understanding of the client’s policies, processes, customers, pre-engagement performance issues and trends, backlogs, systems, workflows. The due diligence should also include an assessment of the needs and capabilities of stakeholder functions outside the scope of the engagement where there are mutual concerns. Doing this is essential and will definitely keep the noise level down once the change is underway.

Provider’s staff and management: Understand the provider’s staff qualifications and management structure, tenure and turnover history. Nothing is worse than handing over key functions to a third party, particularly in a remote location, when the individuals assigned the work are not trained, do not have the requisite experience and are not managed by someone with experience in a similar engagement.

Potential Loss of Managerial Control

Whether you sign a contract to have another company replace an entire function or department or single task, you are turning the management and control of that function over to another company. It is imperative to set specific expectations for performance and transparancy at the outset of the engagement. This is how a client manages the provider.

Identify the SLA’s that represent the service levels you are looking for. Try to integrate linked functions with common targets. There are lots of possibilities. For example, Dispute reduction targets could link Sales, Customer Service and Credit. Other departments like pricing or returns control could share a target for deduction reduction, resolution turnaround and deduction write offs. Require constant monitoring and periodic reporting of results.

If the outsource provider beats expectations, build an incentive into the agreement, if expectations are missed assess a penalty until performance gets back on track.

Remember, at the end of the day both you and your outsource partner must find the relationship profitable. A poorly planned implementation with few or inappropriate expectations is likely to be a financial loser for both parties and end poorly.

Hidden Costs

Beware of hidden costs as you negotiate the outsource agreement.

Extra fees and charges may result from a request by the client not covered in the contract.

Consider legal fees and the cost of ongoing liaison and communication with the outsource provider in determining your real costs.

Regardless how effective and efficient an outsource provider is, an internal dedicated resource is essential for day to day liaison. This individual will be responsible for coordination between the internal stakeholders, management and the outsource provider. Responsibilities should include: Coordinating inquiries from the outsource provider related to problem transactions, monitoring service level agreement metrics, reviewing performance reports and keeping management informed.

Threat to Security and Confidentiality

Evaluate the outsourcing company carefully. Understand how they maintain data integrity and security. What is acceptable down time, recovery time, are they keeping redundant files in a safe location? You contract should have a penalty clause for any breach in security or confidentiality. If your company is required to comply with Sarbanes Oxley confirm the provider is SAS compliant.

Quality Problems

The outsourcing company is motivated by profit. There is nothing wrong with that but this is a key reason to set expectations upfront. As previously stated define SLA’s carefully. Make it financially painful for the provider to miss expectations. The real objective is to reduce provider errors and delays affecting your business. Require the provider to report shortfalls in expected results, the driving reasons and the action plan to get back to acceptable performance. Often the client finds their own internal operation is to blame. Use the provider’s feedback to fix the root cause internally.

Businesses grow, retract, enter new markets and face changing competitive landscapes. Be comfortable before making a provider choice that the provider will be able to rapidly respond to changes in the business environment.

Tied to the Financial Well-Being of the Provider

Since you will be turning over part of the operations of your business to another company, you will now be tied to the financial well-being of that company. Do a thorough risk assessment up front. Make sure you periodically review the outsourcer’s financial stability and standing in the marketplace.

Employee Attitude and Morale

The word “outsourcing” can have negative connotations for your internal workforce, especially those left behind. Be sure your key individuals are part of the outsourcing engagement early in the process. They must be kept aware of the engagement’s scope and intent. Open and frequent communication is key.

Compare the Service Level and ROI Between Outsourcing and Developing Internal Capability

Before deciding to outsource key functions take a look at what it would take to develop your own internal capability.

Is it cost effective to simply automate a process that is currently labor intensive?

Would process integration between departments reduce costly delays and exceptions?

If there were coherent measurements, performance tracking, accountability and reporting timeliness and transparency, would costs go down and customer service improve?

Lastly, what is the value of your company’s “intellectual equity”? By outsourcing entire functions with no one left internally with the knowledge and expertise needed to perform those functions, a client becomes increasingly dependent on the provider. At some point it becomes an overwhelming and possibly an insurmountable task to bring the functions back in house. No one is there capable of the handoff.

Bottom line, the grass is not always greener…..

Robert S. Shultz is a founding partner at Quote to Cash Solutions (Q2C) LLC, a consulting firm that focuses on delivering quality solutions that improve client revenue opportunities, cash flow, operational efficiency and customer retention and satisfaction and when needed, management and staff training. He can be reached at (805) 520-7880. For more information, visit Q2C’s website atwww.quotetocash.com.

This is part 1 of a 2-part series on this topic. Read part 2 here.Part 1: Seven Advantages to Consider

Overview:Many companies consider outsourcing all or part of the order-to-cash process as a cost-effective alternative to retaining internal staff and infrastructure improvements. This is not a decision to be taken lightly. It requires a thorough evaluation of choices.

I like to look at the entire process from beginning to the end. Start with the development of a price and terms quote. Understand how the decision will impact all the steps leading to good funds sitting in your company’s bank account. All the steps in between are interconnected. In short you have to consider the quote to cash process in total. Ensure all the stakeholders are working in concert to provide your company with efficient support and your customers excellent service.

Any decision to outsource should consider the impact on all elements of the quote-to-cash process. The project leader must take in to account how the decision affects the other stakeholders involved. Senior management, sales, customer service, operations, project management, etc. all either feed into the affected processes or are impacted by the performance results. To ensure success, involve these other stakeholders from the beginning. Their perspective and involvement is critical. Remember, customer service considerations should take a priority seat.

There are numerous factors you need to consider when deciding if outsourcing or improvement of internal operations through automation is best for your company. You will notice many of the decision factors go beyond just the potential money savings.

When done for the right reasons and in the right way, outsourcing can, in fact, help your company grow and save money. Just make sure the decision is deliberate and well thought out.

Advantages:

1. Focus On Core Activities
In periods of rapid growth or, as with many companies in recent years, a reduction in business activity, back-office operations must expand or contract as the business changes. If the back office does not keep pace with the business activity, it can consume resources (human and financial) at the expense of the core activities that have made your company successful. Outsourcing functions like order entry, credit control, collections, dispute management and cash administration can provide opportunity. Remaining internal resources can be refocused onto priority business activities without sacrificing quality or service in the back office.

2. Cost And Efficiency Savings
Back-office functions may be complex and require a level of sophistication in both human and system resources. As your company grows and internal operations expand, management may be faced with a choice: make sizable investments to keep up with the growth, or find a third party capable of taking the hand off. Without the needed improvements, the company may not be able to perform at an acceptable level of accuracy or speed at a consistent and reasonable cost.

3. Potential to Reduce Overhead
Overhead costs can easily run higher than expected. If functions can be moved to an alternative location or partnered with an automation provider, there will be a significant cost savings realized on total overhead.

4. Operational Control
Operations that have costs are running out of control are prime candidates for outsourcing. There is often a lack of compliance control, fuzzy objectives and performance tracking in accounts receivable departments at many organizations, and these are situations where an outsource provider may bring more up-to-date and effective skills than are currently available within the struggling company’s staffing budget.

5. Staffing Flexibility
Outsourcing will allow operations that have seasonal, cyclical or special project demands to bring in additional resources when needed. Excess staff can be released when the need diminishes.

6. Continuity & Risk Management
Periods of high employee turnover can add uncertainty and inconsistency to any operation. Outsourcing Q2C functions may provide the continuity needed to reduce the risk of substandard performance.

7. Dedication of Internal Staff to “High Priority” Core Functions
Critical strategic customers need to be adequately supported. Outsourcing low priority functions and, at the same time, lowering cost will enable highly skilled internal staffers to focus on critical priorities and major accounts.

In Part 2 of this series (which will be posted tomorrow), we will examine preparing for an outsource engagement and the challenges outsourcing Q2C can present. You will learn which factors to consider in weighing an internal vs. an outsourced Q2C solution.

Robert S. Shultz is a founding partner at Quote to Cash Solutions (Q2C) LLC, a consulting firm that focuses on delivering quality solutions that improve client revenue opportunities, cash flow, operational efficiency and customer retention and satisfaction and when needed, management and staff training. He can be reached at (805) 520-7880. For more information, visit Q2C’s website at www.quotetocash.com.

“As a longtime CMA member, there are two services that I really value. The monthly credit exchange meetings from the Industry Credit Groups provide very valuable information. The accounts discussed may not be on your radar the day of the meeting but down the road a day, a week, or a month, you will have use for what was discussed at the meeting.

In addition to the information gained at the monthly credit exchange, I find the information on the ancsers group reports very valuable in day-to-day decisionmaking. You won’t find that information anywhere else.”

“I Am CMA” is a Membership Committee driven initiative to allow members to share the most valuable aspects of their membership with CMA members. The monthly series explores CMA’s different programs and services and how they have helped members. With a full range of business credit services from Industry Credit Groups to credit reporting to construction forms filing services to collections to business insolvency, we hope the series will inspire you to utilize CMA more to help provide information to reduce your company’s overall risk.

For more information on the blogs, or to be featured, contact CMA Communications Manager Alan Dicker at 323-573-0840 or adicker@emailcma.org.

CMA member (and former Chairman of the Board of Directors) Darrell Horton, CICP, of Aristocrat Inc. has announced his candidacy for the NACM National Board of Directors. Ballots for the NACM National Board will be sent out to all CMA members beginning today Monday October 12. If you didn’t receive your ballot, contact us at CMA and we’ll send you another one.

Horton, who has more than 30 years in the Credit profession, has been an active CMA member since 1992, and has served on various committees and has chaired two Industry Credit Groups and was a founding member of a new industry Credit group. In addition, he has served on the CMA Board of Directors since 2007 in various capacities including Director, Treasurer, Chair Elect, Chairman, Councilor and currently as Advisor. In 2015, he was named CMA Credit Executive of the Year.

Darrell Horton, CICP

“I believe one of the greatest challenges facing NACM and its affiliates today is membership and getting new credit managers involved and connected to realize the value of being in an organization such as NACM. I believe we need to find ways to communicate through the technological methods they prefer to be communicated to. Once they are comfortable with the communication they receive, they would be more open to attending a face-to-face meeting. I will continue to engage the ‘up-and-coming Credit Managers’ to determine what they value, need and demand from NACM both now and in the future. If given the opportunity to be a Director for the NACM, I will do my best to listen to and be a voice for the membership at large, as I feel that this is the responsibility of each and every director, manager, employee and even member of NACM,” Horton said.

Directors are elected for a term of three years following the date of election. Ballots will be mailed to the primary contact for each CMA member company.

All too often our members tell us that they want to take advantage of benefits offered by CMA, but they are not in the budget. For companies on a calendar fiscal year, here’s your opportunity to begin thinking about those budgetworthy benefits for 2016. Even if your next fiscal year extends well into 2016, it’s never too early to start your wish list.

Above all, budget for CMA membership and if your company participates in a credit group, include group membership ($1665 total). Credit groups are still one of the best ways to maximize the value of your CMA membership because the unique combination of industry trade data, insider knowledge about common customers, and industry best practices often pays for your membership fees many times over in helping you grow revenue, reduce bad debt losses, and saves you valuable time in conducting due diligence. One of CMA’s newest groups focuses on developing processes to help the credit department evaluate supplier risk. If your company faces significant exposure from the risk of critical suppliers failing to perform on time (or at all if they go out of business), consider budgeting for membership in the Supplier Risk Credit Group ($1200).

CMA has already scheduled the next CreditScape Summit for March 24-25, 2016, and will soon schedule the Fall 2016 CreditScape, so be thinking about adding one or both events to your budget (CMA members pay $499 per person per event). CreditScape is a unique event focusing on process improvement for the credit department, providing the tools to allow you to act more proactively.

CMA will offer NACM Certification Courses for the CBA and CBF Designations starting in January. These will be offered once a year only, unless there is sufficient participation for additional classes, so if you plan to get certified in 2016 or early 2017, plan to register for the Certification Courses now and budget accordingly ($3000 for all courses per designation per person). Information for all professional development events can be found on CMA’s website and on anscers.com on the Education tab.

Before you budget for your credit information, consider whether you are getting the best value for your budget. Let CMA help you analyze your current credit reporting products– we might be able to save you money by suggesting a more cost-effective reporting strategy (pricing varies by report volume). CMA’s anscersX multi-bureau report combines proprietary scores and data elements from all three major credit bureaus (Dun & Bradstreet, Experian, Equifax) to give you a comprehensive look at the payment history of your customer or prospect ($65 (or less) per report). Budget for some anscersX reports to supplement your existing credit reports.

If you are a construction supplier, consider how using CMA’s Forms Filing Service can save you time and money. With services ranging from preliminary notices to lien warning notices, mechanics liens, bond claims and stop notices, CMA’s Form Filing Services often provide the lowest pricing and best service in the marketplace. You might also be interested in CMA’s new Construction Credit Report, providing title data, public record data, active trade lines, credit analysis and scores, collection agency activity and links to state contractor information, the only all-inclusive report of its type, at $29.95 per report.

— Expanded Two-Day Education Summit will be held March 24-25, 2016 in Newport Beach–

On the heels of its successful inaugural CreditScape Fall Summit in Las Vegas, Credit Management Association (CMA) has announced plans for an expanded Annual Meeting, which will include two days of focused credit management best practices training and workshops to help increase cash flow while reducing your company’s overall risk.

The CreditScape Spring Summit and Annual Meeting, March 24-25, 2016 at The Island hotel in Newport Beach, will feature two days of workshop training, expert practical and legal advice, and networking with other credit professionals.

“The Fall CreditScape event was born out of feedback from members who asked us for help with their collections processes. Survey results from the recent Fall event show that members appreciated learning from subject matter experts and seasoned credit professionals who shared their experiences through panel discussions and interactive workshops. We plan to take that feedback and build an even better program for the Spring,” said CMA President and CEO Mike Mitchell.

“CMA members are always looking for better ways to manage and maximize recovery of their receivables. We are weighing several options for the overall theme of the event, which the educational content will focus around,” Mitchell added. “And as we did in the Fall, we will incorporate the latest techniques in content delivery for adult learners to create a thought-provoking and practical meeting experience that produces valuable take-aways and sustained value for participants and their credit departments.”

Credit Management Association is currently developing the programming for the event, which is designed to propose best practices and methods to help companies increase their cash flow and reduce losses from their customers. Details about the program will be announced later this Fall.

In addition to the increased educational offerings at CreditScape, the event will also recognize the CMA Mentor of the Year, Student of the Year and Credit Executive of the Year.

The event will be preceded by the Credit Executive Symposium on March 23 at The Island Hotel. The one-day event for senior credit executives of national and global companies, offers facilitated discussions and workshops on the high-level and trending topics in credit management.

CreditScape Summits are offered in the Fall and in the Spring, focusing on different aspects of the Credit Management landscape. It is one in a series of in-person educational opportunities offered by Credit Management Association. To learn more about the other sessions and topics, visit www.creditmanagementassociation.org/events or call 800-541-2622.

The CreditScape Fall Summit, an interactive learning seminar and workshop which took place September 17-18 at the Tropicana Las Vegas, was a success, according to preliminary survey results that were tabulated after the event.

Among the feedback received: “What key takeaways did I get? There were too many to list. There were takeaways from every single speaker.” Another attendee said, “I learned we need to use automation much more. We can start by using metrics.” Several other attendees mentioned that they’ve already recommended this event to a colleague.

Plans are already underway for a 2016 Spring CreditScape and Annual Meeting, March 24-25, 2016 at the Island Hotel in Newport Beach. Details about the event are forthcoming.

Thanks again to all who attended the event!

“Speed networking” event allowed attendees to discover services that can help them “prevent collections” at the 2015 CreditScape Fall Summit.

Submitting your company’s full A/R has been talked about quite a bit this summer. There is a reason for that…it’s important. I wanted to take a minute to point out the value and personally ask for your support in this request. You know, the more companies that contribute, the more people that will benefit. If you contribute, your company will have an advantage. Besides, with today’s web-based technology, it’s very simple, fast, and secure to do. Let’s all support Credit Management Association and contribute our full A/R’s so we can all make better business decisions.

Below are a few bullet points as to the value of submitting your full A/R:

Reference Information – Trade experience will be available to you right away. No need to wait for faxes any longer.

Supports NACM and CMA – This contribution will support the National Trade Credit Report (NTCR) as well as members at Credit Management Association.

Easy to Contribute – Most of us already submit to our Industry Trade Groups. You can use the same format such as Excel to contribute your full A/R and send it right off to CMA.

Informed Decisions – You will be able to approve credit applications in a timely manner with current up-to-date information. This will also help you with updating accounts, when those big orders come in at the 11 hour. This happens to all of us.

Supports Well Established Customers – Members will be able to support their good paying customers and everyone will know who is consistently paying on time.

No Need to Respond to RFI or Group Lists – This will save time and money as contributors’ information will automatically be added to the Anscers database. This is a nice feature. Additionally, this will also strengthen your Industry Credit Group.

Reports Delinquent Customers – Members will know who isn’t paying regularly month in and month out.

CMA President Mike Mitchell has offered an incentive – Beginning October 1, members who support the NTCR program with their monthly accounts receivable contributions will get 25 free NTCR reports annually and receive a discounted price of $9.95 per report over and above those 25 free reports. To get complete details please go here.

And, as always, Credit Management Association is here for YOU! Make sure you talk to your leaders to see if you can take advantage of this benefit. You can’t go wrong. Thank you for taking a few minutes out of your busy schedule to read this blog.

Please remember we need you to support “your” credit association when you can and as always “thank you” for your support. I encourage you to send in any ideas to improve your credit association. Let me know your thoughts. I’d love to hear your feedback.

Michael W. Fenner, CBA, is the Credit Management Association Chairman and Regional Credit Manager for Beacon Roofing Supply. He can be reached at 714-321-8187, or mfenner@becn.com.

CMA, through the input of its Membership Committee, has launched a new campaign to allow members to share the most valuable aspects of their membership with CMA members.

Titled “I Am CMA,” the series will explore CMA’s different programs and services and how they have helped members. The first blog will appear at CreditManagementAssociation.org in October.

With business credit services ranging from Industry Credit Groups to credit reporting to construction forms filing services to collections to business insolvency, we hope the series will inspire you to utilize CMA more to help provide information to reduce your company’s overall risk.

For more information on the blogs, or to be featured, contact CMA Communications Manager Alan Dicker at 323-573-0840 or adicker@emailcma.org. We hope you enjoy the series.

Negotiation is not a contest to see who can prevail. It is the “art” of getting to the point where two parties can agree on critical concerns. It encompasses employing core negotiation principles, the use of applicable strategies addressing the situation, focus on specific objectives, having a fallback position and, if all else fails, knowing when to walk.

Following are 10 considerations creditors can use to improve negotiation results. This is not complete list by any means. However, these points are critical for a successful negotiation outcome.

1. Don’t alienate the other party: In an effective negotiation, both sides must have the desire to reach a conclusion without alienating the other side. In the end, both sides should be satisfied with the result. If your counterpart seems unwilling to reach a desirable outcome, find points that will gain support and acceptance. Effective negotiation requires knowing how to satisfy a customer’s needs and amicably resolve differences. By being skilled in negotiating you will be able to collect more dollars, improve overall performance, and improve customer satisfaction.

2. Practice effective communication: Successful negotiation involves effective communication between the parties. To eliminate communications roadblocks, consider the following:
• Listen first. Pick up on what is said to clarify or modify your position.
• Find a basis for common understanding.
• Clearly state your case and what you want.
• Recognize the style of the other side and communicate in a fashion they can relate to. Don’t be intimidated or overwhelmed by aggressive behavior coming from the other side. Keep focused on your objectives and remain calm. If things become unprofessional with no change of behavior in sight, be prepared to walk.
• Deal with the decision maker. Invest your time with someone who can make a decision.
• Ask probing questions that cannot be answered with a “Yes” or a “No” and make the other side explain the answer.

3. Avoid elevating issues into a conflict:
• Find common ground: Both parties should have a strong understanding of one another’s needs.
• Break down issues into manageable/understandable pieces: Sometimes an impasse can be avoided by breaking the issues down. Start with what you can agree on. Attack the easiest issues first. You may find when the easy issues are resolved most, if not all, of the big issues have evaporated.
• Build a track record of trust: Once you have agreed on issues where some give and take was possible, a trust develops between the parties

4. Practice the “Four C’s” of negotiating: These points describe an approach. Not everyone you come up against will use this approach.
• Caring: Be sincere. Listen to the other party and be interested in their issues.
• Calm: This is a tactic that will encourage the other side to state their position and objections without undo emotion. When they are excited and you are calm, it tends to bring them down.
• Clear: Confirm the other party heard you and clearly understands your position. To avoid misunderstanding, restate what you hear. Repeat what is said and keep repeating until you get it right. It may take several tries.
• Comprehensive: Prepare yourself as best you can under the circumstances, time constraints and information available. Think about: Possible “What Ifs” and “What Nots.”

5. Prepare yourself in advance of a negotiation:
• Do your homework and learn everything you can about the other side. Try to understand their motives and objectives. Determine what you want to accomplish. In face-to-face meetings, have an agenda handout or an executive summary.
• When the negotiation starts, have all the necessary documentation in front of you. Have a plan for your initial position and your final position.
• Have a primary and secondary goal: A primary goal is a necessary outcome. A secondary goal is what you can accept and still meet your company’s needs.

6. Understand your “Best Alternative to a Negotiated Agreement” (BATNA): This is the course of action you will take if the current negotiations fail and an agreement cannot be reached. This is different than your “walk away” point. Very often if a win-win cannot be achieved, going for a “no deal” could be the best answer. You can’t win every time. There may be business factors that override a negotiated settlement if one cannot be reached.

7. Define the negotiation scope and approach: This will depend on several factors, each of which must be considered as you enter any negotiation with a customer.
• What are the key issues or obstacles that need to be addressed? Is it payment? Does the other party need additional information to meet your request?
• What are your restrictions? (Time, costs, etc.) Are you up against a deadline?
• Is this a major issue or a priority for your company? Should you spend a little or a lot of time dealing with this?
• Can you trade on an issue that you feel has limited importance to win on a major one?

8. Know who you will be negotiating with: What is their negotiating style? Determine how you expect them to approach a negotiation? Work to establish a rapport at the outset of the negotiation. Separate people from the problem. Remember, negotiators are people first. In most supplier/customer negotiations, the negotiator has two basic interests: The issues at hand, and a desire for a continuing relationship between the parties.

9. Understand the business and future relationship potential: Is this customer of strategic importance to your company? Review your company’s historical relationship with this customer. Is the issue at hand an anomaly, or is it a repetitive issue? What is the revenue and profit potential in the future? Is the relationship worth saving?

10. Be culturally sensitive:
• Don’t Apply the Golden Rule: “Do unto others as you would have them do unto you.” Use the “Platinum Rule” – “Do unto others as they would have done unto themselves.”
• Understand what is offensive: You might be comfortable looking someone straight in the eye, introducing yourself with a firm handshake, being direct and open and getting right to business. Other cultures encourage other behaviors.
• Be sensitive to the appropriate sequence of business and negotiation: It is not appropriate in some cultures to first do business and then develop a relationship. You are expected to develop a relationship and then do business. You need to understand what goes first.
• Understand the “real” message: Cultures vary in the way they communicate their message. You must be sensitive to these differences to understand what they are telling you and react effectively.

Effective negotiation is truly a combination of art and science. It takes planning and effort to reach a result acceptable to both parties. In doing so, business between the parties can continue. As a supplier, you can collect more cash and keep more customers.

Robert S. Shultz is a founding partner at Quote to Cash Solutions (Q2C) LLC, a consulting firm that focuses on delivering quality solutions that improve client revenue opportunities, cash flow, operational efficiency and customer retention and satisfaction and when needed, management and staff training. He can be reached at (805) 520-7880. For more information, visit Q2C’s website at www.quotetocash.com.

The Wall Street Journal reports that credit card use in the B2B space continues to increase as a preferred payment channel for customers. Suppliers accepting cards in the B2B space commonly receive payment through card not present forms, whether through payment portal, email, fax or over the phone. For those suppliers that accept cards in the cardholder’s presence, card issuers are changing card acceptance rules to give cardholders greater protections from identity theft.

“Chip and pin” or “smart cards” are credit or debit cards that store data on integrated circuits rather than on traditional magnetic stripes. The transition to “chip and pin” or “smart card” technology is now largely underway in the United States. The transition is being assisted by the shift in liability for card-present fraud that will be implemented on October 1, 2015.

Currently, if an in-store transaction is conducted using a card obtained fraudulently, cardholder losses from that transaction lie with the payment processor or issuing bank. From October onwards, that liability will shift to the supplier that has not changed its system to accept chip technology. If a customer uses a chip card, the failure to update the card reader may permit a counterfeit card to be successfully used. In that scenario, the supplier will bear the cost of the fraud. Again, the supplier will only be responsible for the cost of the fraud if the fraudulent transaction is a card-present transaction.

The major benefit of using a “chip and pin” payment card, and what compelled the US to migrate its cardholders to the new generation of cards, is improved security and fraud reduction. Whereas magnetic stripe card transactions rely on the holder’s signature and visual inspection of the card, the use of a PIN and cryptographic algorithms provide authentication of the card to the processing terminal and the card issuer’s host system.

The identity of the cardholder is confirmed by requiring the entry of a personal identification number (PIN) rather than signing a paper receipt. Unlike magnetic-stripe cards, every time a smart card is used for payment, the card chip creates a unique transaction code that cannot be used again. This eliminates the possibility of card duplication fraud as the transaction code becomes obsolete and cannot be used in further transactions.

While much of the rest of the world has already been using “chip and pin” cards for several years, the US is now committing to migrate its credit card use to this more secure format. There is a historical viewpoint regarding the reason for this delay by the US in updating its credit card technology standards. In the past, fraud was much more prominent in markets outside of the US. What has happened, especially over the course of the past few years, is that since other markets have migrated to “chip and pin” cards and become more secure, fraudsters have moved their focus to the US market. Essentially, they came to the US market because they were looking for less secure networks from which to steal fraudulent credit card information.

For suppliers in card-present transactions, the switch to this technology means adding new in-store technology and internal processing systems, and complying with new liability rules. For cardholders, it means activating new cards and learning new payment processes. And for the supplier and cardholder, it means a more secure form of payment by credit card, and fewer opportunities for fraud to occur. As the credit team is responsible for managing risk, including risk of fraud with payment channels, the credit team must prioritize compliance with this new technology within the organization for card-present transactions.Scott Blakeley is a principal with Blakeley LLP, where he practices creditors’ rights and bankruptcy. His e-mail is: seb@blakeleyllp.com.

With the NFL season officially underway, let’s take a moment to explore what Accounts Receivable departments can learn from coaches, especially when it comes to the season’s biggest game changer: analytics.

As a credit and collections professional, take a look at the metrics you’re currently tracking. Throughout my years as a consultative resource for AR departments, I’ve found that most companies spend most of their time focusing on DSO and maybe how much they wrote off as uncollectible. Don’t get me wrong, tracking how fast you get paid is important. If collecting money was a game, DSO would be the score. But if that’s all you’re measuring, you’re not properly leading your team.

Let’s think about this from the perspective of a football coach. When evaluating a team’s performance, coaches look at many other stats beyond the final score. Tracking things like rushing yards, turnovers, quarterback ratings, third-down efficiency, help identify areas that need to be improved upon as well as potential opportunities. All of these ultimately feed into the final score and the overall success of the season.

If you’re interested in diving deeper to improve your team’s performance but are unsure of what metrics to track, this AR Analytics Playbook can provide some insight on six simple, yet effective metrics that every financial executive should be tracking. By leveraging these metrics, your company is guaranteed to improve customer relations, reduce administrative costs, and get paid faster.

Recently, one of my Industry Credit Groups experienced 3 bankruptcies in less than 48 hours. One of these was an East Coast account that only 2 members were selling with minimal exposure so their losses were small. The other 2 were long-established accounts.

Since I always preach that the 1st alert posted should never be the BK notice, I decided to do some research to see if my words had made an impact. Over the last 5 months, the following alerts were posted on one of the BK accounts:

The alerts must have worked because the anscers report over that period of time showed the other suppliers reacting to these postings and dramatically reducing their exposure.

Group members were given advanced warning on the second BK with postings such as a Mechanics Lien filed, shop account closed, contractor removed from job. Again, you could see the exposure trending down over that period as members reacted to the alerts.

Years ago, group members were mailed pink reports every 2 weeks listing the NSF checks and other pertinent news. It seemed efficient then. Today, the group can be notified in seconds of any problem with a customer.

The only flaw in the system is that members must be pro-active. Most groups have a small but dedicated group of individuals that seem to provide 90% of the alerts. To prevent losses, you need every member looking for opportunities to report a change in payment habits. Encourage your group to utilize this service.

Somewhere, there is an alert waiting to be posted that will save your company $$$$ and help you manage risk. Let’s be sure you see it.